Saturday, September 20, 2008

Q&A on NYC Pensions

I remember hearing some bad stuff about how pensions and salaries were treated in NYC in the 30's. And we haev the example of the mid 70s' when salaries were frozen, schools closed, preps cut and there were 15,000 layoffs. Remember the current UFT contract assures no layoffs - unless there is a financial crisis. That is the source of the ATR situation. And if there are layoffs, will they find a way to get rid of ATR's or will the newer teachers be cut?

Anita asked a question on ICE-mail to Queens high school chapter leader Michael Fiorillo (see his suggested financial commentary web sites in the sidebar). (People could use some answers from the UFT.

The questions I have and I'm hearing from colleagues: is a TDA account insured? What about our pensions?? (Feel squeamish that we just don't know such basic facts.......)

Michael responds:

Hello Anita and Everybody,

To answer your questions as best I can, and please DO NOT base any personal decisions on what I'm about to say since I can be wrong, my understanding is that:

- If by "insured" you mean guaranteed by the federal government a la the FDIC, then Variable A is most certainly NOT insured.

- I am not familiar at all with Variable B, and cannot comment. It is said to be invested in the most secure and stable financial financial instruments, but what does that even mean in this climate?

- Frankly, with the caveat that I could be wrong, I have fears about the fixed fund, as well: it is certainly not insured by the FDIC, and if there is any kind of insurance it is through private entities (such as AIG , AMBAC and others). Not a comforting thought. I've been following this issue very closely for years now, and have worried about the safety of the fixed fund in a financial crisis. After all, at a time when banks were paying 2-3% on CD's, how was the fund able to provide an 8.25% return? My fear is that they could possibly have these toxic intstruments, which paid higher interest.

- As for the pension fund, the New York State constitution protects the pensions of all vested members. However, and realistically, how much comfort is that, when the Federal Reserve Bank itself is overextended? Unfortunately, the predators and parasites at the investment banks - the same people "investing" in charter schools, Teach for America and corporate school reform in general - have for years seen the pension funds as rubes to be fleeced.

What we are seeing is the direct result of thirty + years of income polarization based on the cannibalizing and outsourcing of the nation's real productive capacity; unfortunatley, because of the infinite greed of these sons of bitches, we will all reap the whirlwind.

I hope this "helps."

Best,
Michael Fiorillo (aka "Mr. Sunshine")

2 comments:

  1. Let's get something straight here.

    The TDA's 8.25% interest rate is set until June 2009 and cannot fall below 7% ever! The State is responsible for any shortfall to the fixed fund. The only way our TDA is at risk is if the State defaults and declares bankruptcy....Which has never happened in New York State because of its taxing authority.

    The same goes for our pensions

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  2. "cannot fall below 7% ever!"

    The 7% rate is in the constitution which can be amended, something which will not likely happen unless things get so bad the pressure builds to do so. Expect a witch hunt - "look at those obscene interest rates while everyone else suffers" kind of stuff.

    ReplyDelete

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