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Alabama Town’S Failed Pension Is A Warning U. S.

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http://www.nytimes.com/2010/12/23/business/23prichard.html?_r=1&ref=business

This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.

Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.

Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”

The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.

Coming to everyone soon?

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Coming soon, I certainly believe so.

I have said it before, and will say it again now, the only way to eliminate the long term deficit in the UK is to cut benefits. Sure we need to cut the numbers employed by the state, and reduce pay, but benefits have to be targeted too.

And that means pensions. There are simply too many pensions liabilities for the young of our country to be able to pay. State pensions and civil service pensions, all paid out of taxation, are growing burdens. Taxation is a mechanism for taking the output of the labour of our young people who are producing, and giving it to the retired who are producing nothing.

Trouble is, tax too much, and the young wont pay tax. They will either leave the country, work in the black market, or claim benefits instead, the latter being a double whammy of less tax and more expenditure.

Point out that pensions cannot be afforded and you get called something nasty. However, lets look at the citizens of this town. If they had had their pension entitlements cut 15 years ago by a large enough amount, they would still have something being paid to them today, instead they have nothing and are, from the description above, starving to death in some cases.

That is the reality that we will face in the UK unless we change things. Reduce the tax burden on the producers in our society, reduce the pay and benefits to those working for government with the highest earners taking the biggest hit, and reduce state pensions, including increasing the state pension age to a higher level more quickly.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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