G.R. Patterson III wrote:

"Matthew S. Whiting" wrote:

Where does this "certain amount of money" to be set aside every year
come from if note from current tax revenues?


That comes out of tax revenues. When the employee is working. Retirement pay does
not come out of current tax revenues in the education systems with which I am
familiar.

It doesn't come out directly, but it still comes from tax revenues. And
if you have more retirees, you have to more heavily fund the pension
fund and that means setting aside more each year into the fund, which
comes from tax revenues. To say that tax revenue doesn't pay the
pensioners is ridiculous.


Not necessarily. Just look at all of the corporations that are now
having to pour hundreds of millions into their pension funds to keep
them solvent.


We were discussing education system pensions. The corporate solvency issue is
primarily caused by the fact that the Federal government changed the requirements
to increase the amount of money that must be retained for each employee in a
standard retirement package plan. Some companies simply reacted by abandoning
these plans for new employees and providing strong incentives (as in "change or
get fired") to current employees to transfer over to what is called a "cash
balance payout" plan. The increased limit requirements were instituted in
reaction to the Enron scam.

I think the larger part was that investment returns dropped well below
the assumptions needed to keep the funds solvent. That has had a huge
impact, at least at my company as was the reason given by top management
for putting in much more money this year and last.

That may also be the reason that Capt. Haynes is not in a good position
financially to help fund his daughters medical care.

Matt