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Millions of Americans believe they’re sitting pretty with their pensions funds, 401(k) retirement plans and medical benefits. But, as we’ve written previously on numerous occasions, pensions are anything but safe.
We’re starting to see the coming pension wipe out creep up in smaller cities, and you can be assured that this will spread like wildfire as local, state and federal governments that have over committed funds and underestimated economic growth and tax revenue struggle to stay in the black.
The latest example comes to us from Central Falls, Rhode Island, where the city government has basically told pensioners that they can either voluntarily agree to pension benefits cuts of 10% to 50%, or face the possibility of a total wipe out of their retirements if the city goes bankrupt:
According to a CNN report, Judge Robert Flanders who appointed by the state to work out a solution to keep the the city from going bankrupt said the choice is limited to the pensioners to either volunteer to a 50% pension cut or risk losing it all in bankruptcy court.
The ultimatum has been given as part of an overall restructuring plan for the city in which broad sweeping sacrifices and deep budget cuts are being made across the board in order to close the gap on the city’s $80 million dollar budget shortfall.
Source: Alexander Higgins
In a Fox News interview (video below) Judge Flanders lays out the reality of the situation:
Fox Host: Correct me if I’m wrong, but I read a quote from you, “A haircut looks better than a beheading.”
Judge Flanders: Correct. What I was trying to convey is that a bankruptcy may even be worse than what we propose, and so I was hoping to do this by voluntary agreement. As terrible as it was, it may be better than what we can offer in a bankruptcy.