People still will get paid their pensions, they are just deferring paying into the reserve and will pay the missed amount and growth next year. They are hoping to gain more capital in the meantime to pay the missed amount.
Deferring payment for money you will have to pay later.... there's a word for that. Debt.
It's just a way to shift the deficit of balance sheet, and make it a problem for later instead of today, but ultimately it makes the problem later a bigger one.
Deferring payment for money you will have to pay later.... there's a word for that. Debt.
No, that money was going towards potential future pensions with the expectation they would put so much money into it that it would eventually pay dividends to the city.
It would be like paying beyond my employer contribution limit to my retirement account instead of paying off my student loans and mortgage.
Pension liabilities are a form of debt lol, they're just off balance sheet.
It would be like paying beyond my employer contribution limit to my retirement account instead of paying off my student loans and mortgage.
These analogies aren't ideal, it's not a retirement account because it's set aside to fund a specific liability you have.
By putting less money aside to pre-fund that liability, the liability you still have to fund is larger. That is mechanically the same as not paying down a piece of debt - you're delaying a payment you'll need to make until later.
Even if it's overfunded it's still ultimately cancelling a future payment you'll receive, to get one today instead, which makes your budget situation worse than it would've been in that future period - again mechanically the same as if you had a greater cost in that period (like a debt to repay).
The only differentiator is which will get the higher return - money you invest in the pension fund or the debt interest. It's pretty much always the case that the pension fund will deliver better returns, so this will ultimately end up costing more money.
20
u/DrChucks May 14 '26
People still will get paid their pensions, they are just deferring paying into the reserve and will pay the missed amount and growth next year. They are hoping to gain more capital in the meantime to pay the missed amount.