Plans to use our Pension to pay off others Student Loans!

Pension Raiders

How forgiving Student Loans can affect your pension

I’m watching many current presidential candidates and politicians discussing forgiving student loans.

One of the main ways suggested to accomplish this is by “having Wall Street” pay for it.

In reality it’s having our Pension Plans pay for it!

Bernie Sanders plan lays it out like this, “We can guarantee higher education as a right for all and cancel all student debt for an estimated $2.2 trillion. To pay for this, we will impose a tax of a fraction of a percent on Wall Street speculators who nearly destroyed the economy a decade ago. This Wall Street speculation tax will raise $2.4 trillion over the next ten years.  It works by placing a 0.5 percent tax on stock trades – 50 cents on every $100 of stock –  a 0.1 percent fee on bond trades, and a 0.005 percent fee on derivative trades. 

The problem is Wall Street is US!

Pensions, like PERA and 401k’s invest our money in Stocks on Wall Street. How well those investments perform determines the health of our Pension Funds and our COLA’s (Cost of Living Adjustment).

I’ll use the PERA Correctional Plan as an example. Our plan is based on an actuarial return on investment of 7.5% annually. 

The PERA Correctional plan COLA is dependent on funding status, a large part of that is investments!

“Beginning in 2019, the COLA will be equal to 100 percent of the increase announced by SSA, with a minimum increase of at least 1 percent and a maximum of 2.5. If the Plan’s funding status declines to 85 percent or below for two consecutive years or 80 percent for one year, the cap will be lowered from 2.5 percent to 1.5.” -PERA website 

In other words, if Wall Street is taxed to pay off student loans, Retirees and 401k’s will be the ones paying those loans.

The result would be lower monthly retirement payments and lower cost of living adjustments.

You never thought you’d work all of your life just to have your retirement investments taken to pay off someone else’s student loans did you?

Some politicians think that’s a great idea. 

According to Bernie Sanders, taxing Wall Street will raise $2.4 Trillion over 10 years. That's a $2.4 Trillion hit on our investments! 

The concept of taking our investments to pay off someone else's student loan is wrong.

Watch your wallet.