I have been interested in pensions since the debacle at GM in the 90’s and early 00‘s. General Motors might have been a well run company at some time earlier, but through my formative years I was exposed to the Corvair problem, reluctance to install seatbelts, gas-gusselling cars during the ’73 oil embargo, billions lost with Saturn, and the subsequent purchase of Hummer & Saab, etc. But the cut that hurt them the most was the good-willed, but ultimately devastating medical and retirement pensions brokered in the ’60’s. In 2005 GM’s medical pension ALONE cost the company $5 billion. By 2008 General Motors was not a viable business without bankruptcy and a government bailout. The biggest losers were not the investors in GM’s stock and bonds, but the employees that were stiffed from contract negotiated benefits that could no longer be afforded.
I first became more than interested in pensions at GCC in 2005. At that time the police staff at GCC was negotiating the same pension benefits as their brethren in the surrounding municipalities. I wrote several emails to the classified staff before the contract was ratified(available here) giving my thoughts and related links (letter 1). In the intervening years I have gathered 50 or more links to articles from around the world concerning the cities, counties, or states that are having great difficulty affording their police pension obligations.
Here we are in 2011 and things have gotten worse for pensions. The Trillion Dollar Gap was published this year. It was conducted by the PEW Research Center, which you may be familiar, as they sponsor many informational telecasts on PBS. Please pay attention to California and Wisconsin details. The recent travails for union workers in Wisconsin look to be political more than financial, but the overall outlook is quite bleak. Also, the medical pension information is alarming.