You can see the financial depression coming, this is a act of desperation over a problem that began in the early 70s.
Last March congress passed a provision which forms a committee which would use federal funds to bail out as many as 200 “multi-employer” pension plans – where employers and labor unions jointly provide retirement benefits to employees. As is often the case, this rescue “plan” is too little too late. The US pension system is beyond repair. And if you’re depending on pension income to carry you through retirement, it’s time to consider a Plan B.
Before going into details, let's analyze. Pensions are simply giant pools of capital used to pay out benefits to workers. Typically, employers and employers contribute a percentage of their salary to a pension throughout their career. Then, upon retirement, the pension is supposed to pay a constant fixed monthly amount to the retiree. (the last year of employment working overtime, getting higher pay and so forth is often used to drastically increase this fixed pension amount to defraud the system). There are government and corporate pension plans, there is a estimated 1,400 multi-employer corporate pension plans who are facing a $553 billion shorffall, 25% of these corporate pensions are in the 'red zone', meaning they are scheduled to file for bankruptcy within this decade or so, but Congress appointed committee, assuming it will work, would not even rescue these red zone pension plans, much less the remaining 1050 private pension plans.
All of this doesn't even begin to address the real fundamental problem - the $7 trillion funding gap faced by the government own PUBLIC pensions. Congress is stepping in because the Pension Benefit Guaranty Corporation (PBGC) is the pension equivalent to the Federal Deposist Insurance Corporation (FDIC) which backs people their bank deposists up to $250,000 is completely insolvent. Yes, they are bankrupt and can not back pensions at all. In essence we are seeing the end-game of a pension ponzi scheme.
The PBGC only covers Corporate pensions and had a $76 billion deficit in 2017, it has assets of $108 billion on it's books compared to a potential loss exposure of more then $250 billion. By PBGC own estimations, it's fund to cover multi-employer pensions (which makes up $65 billion of the outstanding $533 defecit) will be insolvent by 2025. Pensions are in such bad shape today for the simple reason that investment returns are too low and the mismanagement and fraud has had detrimental effects, pensions can no longer cover their future obligations.
There’s zero chance these funds will be able to pay out retirement benefits. They’re taking huge risks at all-time highs and they have zero downside protection (the PGBC is broke). It’s smart to consider some other options like a self-directed IRA with precious metals you hold in your possession, solo 401(k) are also a option but beware that Obongo tried to seize these 401k's during the 2008 crisis and nationalize all of them into a slush fund and use the main funds to bail out the banks and then continue with a facade that people would be able to get their money with limitation on withdrawal options. Perhaps a SEP IRA is also a solution. All of these allow you significant latitude in making better, safer and stronger investments, rather then leaving a crook to manage your future. Plus, they allow you to put more money away toward retirement before taxation occurs. And there’s no downside to that. You’ve got make long-term plans for retirement, but the system they tell you to trust is officially broken.
