In the wake of Detroit’s bankruptcy filing, some public and private sector workers and retirees in other cities are reviewing the security of their pensions

1. Review the Safety of
Your Pension Plan

2. The “What-If?” Review
Some financial and retirement experts are recommending that workers
and retirees who are dependent on pension plans do some “what-if”
scenario planning to review how well prepared they might be for a
possible cut in their pension benefits.

3. The Current Climate
The practical result of cities like Detroit filing for bankruptcy is that
city workers and retirees could see their pensions reduced, perhaps
drastically.

4. Pension Cuts
One city in Rhode Island that declared bankruptcy in 2011 cut one out of every
three of its retirees’ pension payments by more than half.

5. It’s Not Only Cities
The Teamsters’ Central States, Southeast & Southwest Pension Plan, the nation’s largest multi-employer pension
fund, has liabilities ($34.9 billion) that are almost double its
assets of $17.8 billion.

6. Do Some Digging
Another review step recommended by some experts is to find out to what
degree your pension plan is funded. Some cities’ and states’ pension plans
remain well funded, while others are not. Employees who participate in
private and union pension plans are permitted by law to access their plan’s
funding notice to find out to what degree their plan is funded.

7. The States’ Pension Gap
The gap between how much money states have promised to pay their employees
in pension benefits and how much they have actually set aside to pay these
benefits totaled more than $1.3 trillion in fiscal 2010, according to the Pew
Center for the States’ analysis of pension and retiree health-care funding.

8. Local Government
It’s important to note that the pension benefits of most state and
local government retired employees are relatively safe.
The combined assets of all state and local government pension funds
exceeded $3.5 trillion at the end of the first quarter of 2013 — this
was more than 15 times the amount of money paid out by these
funds annually in benefits.

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Associates, Inc.
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