Video #5

First please read these excepts from two current resources for you that shed more light on DB (Defined Benefit) plans.

From the Startribune 12-19-22

The great American bailout goes on and on by Charles Lane

"Your federal taxes just paid $36 billion (a partial bailout) when President Biden signed the bill surrounded by Teamster union leaders. Ironically the name was the Pension Benefit Guaranty Corp. Guarantee leads to bankruptcy. I have learned to not listen to what pension leaders say as much as what they do. Fortunately it stated “But there is no case for using public money to protect every single dollar of them, when the vast majority of taxpayers enjoy no such perks.” We’ll see, it could be a head fake and I have never heard this from a Minnesota pension leader. One of my main goals is to find out exactly what Minnesota pensions pay to retirees who have made it a career. My fear is that those facts are hidden behind statutes."

From The Economist 12-10-22 The Pension Time Bomb

“And part of it ( the future retirement burden) will be borne by a creature that is becoming ever rarer: the DB pension plan.” Every time another state turns away from DB plans Minnesota becomes more of an outlier. I’ve read articles on why we shouldn’t change which seem ridiculous to me. Other states are able to change but we are not. It’s all politics! “Public-sector employers have had much less success in reducing their exposure to these overgenerous pension schemes, however.” “The fate of many DB and social-security pensioners alike could ultimately depend on the government’s willingness to bail them out.” This last statement makes it sound like bailouts are now or in the future but in Minnesota it’s been going on since the 70s. It is possible that we are an outlier in bailouts as well. Does anyone out there know these kind of facts?

I want my ideas to be just a start. There are plenty of people who can do a much better job than I do.

I can’t find real principles in Minnesota pensions. I read about adequate or sound or retire with dignity but they mean nothing. Here is the kind of principle that we need. The Research Director of the National Association of State Retirement Administrators says “as a rule of thumb, financial planners recommend replacing approximately 70 to 80 percent of one’s working income in retirement.” In Minnesota it’s only more and more unless someone shows me. MCFE has calculated that we are significantly higher than 70 to 80 percent in Minnesota.

What I really want is to be king so I can gather any facts I wish before making up my mind.

Minnesota has had some of the nations highest Discount rates and I just found out that our new 7.5 is second highest in the U.S. We hide the facts more than almost all of the states using it. We just can’t be honest!

Here’s a brief explanation. Let’s say we are using are old 8.5 assumed Rate of Return or Discount Rate and our pension plan has 100 dollars in it and for 3 years our investments make nothing. By the end of the first year he now have 108.50 dollars and after 3 years our actuaries tell us we have about 125 dollars in the bank. Then other leaders decide to spend that 25 dollar profit. Our actuarial asset value is now 100 dollars but the bank says we only have 75 dollars. When this is using our real money of many billions of dollars it creates quite a problem. I call this voodoo economics. This is fraud if any private company or if any individual tried fudging numbers this way.

There is a fight going right now with union reps and retirees wanting that Discount Rate as high as possible and others urging more honesty. Unions and retirees are winning for sure.

I am very disgusted with how this is all playing out and even though I am a nobody I am requesting oversight of Minnesota public pensions. Police are close to this and we need it. Minnesota does not have the ability to self correct. Look at education or DHS and maybe more.

Video 6 will be a change and should give you a better perspective.