Calpers Bankruptcy Strategy Pits Retirees vs. All Others

[Purveyor]

By Steven Church and James Nash - Dec 12, 2012
The California Public Employees’ Retirement System is trying to rewrite the rules for bankrupt cities, claiming that it should get paid before almost everyone else, including bondholders.

The biggest U.S. public pension fund would set a legal precedent should courts adopt Calpers’s position that, as an arm of the state, it is exempt from rules that apply to other creditors in the Chapter 9 bankruptcy cases of San Bernardino and Stockton. A Calpers victory would threaten public services in a city trying to reorganize in bankruptcy, or in an extreme case, cause a city to disincorporate, attorney James E. Spiotto said in an interview.

“Chapter 9 was never intended to cause the liquidation of a municipality or the reduction of services,” said Spiotto, who isn’t involved in the San Bernardino and Stockton cases. “What Calpers is doing is threatening the basic tenet of Chapter 9.”

Pension costs for retired public employees are straining local governments from California to Rhode Island. In Southern California, San Bernardino says it is so strapped for cash it must put off $13 million in payments to Calpers or risk public safety. About 400 miles (644 kilometers) north, creditors of Stockton are fighting Calpers in court as well, arguing that the pension fund shouldn’t be given preferential treatment and urging the city to take an aggressive stance in negotiations.

MORE...

http://www.bloomberg.com/news/2012-12-12/calpers-bankruptcy-strategy-pits-retirees-vs-all-others.html

[mike_c]

1. in other words, the cities want to pay bondholders before funding employee pensions....

Paying investor profits, or at least limiting investor losses, before paying into city worker's pensions. Does that about sum it up?

[Vincardog]

3. In other words the Vulture Capitalists want to steal the accumulated retirement from

public employees just as they have been stealing from public ones.

[Vincardog]

2. Pensions should have position #1 fuck the Banksters

[FarCenter]

6. Banksters won't lose -- bond insurers will lose and increase their premiums for other municipalities

[upaloopa]

4. Here's what's happened with our pension in a CA

county. As property values fell so did tax revenue. Then actuarial studies showed the pension fund was underfunded since retirees are living longer. What they did is change some rules that were being abused and came up with a new plan for new hires that pays less.
We need to realize that people need a living wage that also pays enough to save for retirement.
We can't keep on this race to the bottom preferred by the right while the income gap gets wider. We need some new thinking using that income gap graph as the marker. Until there is some redress of the past inequities we should continue to support tax increases on those who took all the wealth for themselves.

[HiPointDem]

5. two-tier. it's happening everywhere. once the oldsters die we'll have a low-wage, unbenefited

workforce. and people won't even recognize how it happened.