Pension Demographics

by | Jul 2, 2012 | Archives

Pension Demographics can destroy existing wealth, yet create new ways to earn with something we love.

Here is an example of how a terrible economic problem in pension demographics can create opportunity.

Merri and I once had the privilege of hosting four Ukraine musicians, members of the Kiev Symphonic Choir and Orchestra, after they performed in Ashe County .   Here they are on our front patio.


Left to right: Merri, Yuri, Andrei, our daughter Francesca, me, Constantine, Danyl.

The Kiev Symphonic Choir and Orchestra, was formed in 1993 by Roger McMurrin, an American minister and his wife after they moved to the Ukraine .

The McMurrins saw pension demographics in action as the Soviet Union crumbled.   The pensioners in the Ukraine still received pensions… but a month’s pay was not enough to live on.    Those who had served society honorably… doctors, teachers, lawyers… skilled workers alike were impoverished.

In November 1990, with the collapse of the Soviet planned economy, the Ukrainian authorities created coupons, for Ukrainian residents. These were required just to buy groceries and living essentials.  Then January 10, 1992, a new currency, the karbovanet replaced the Soviet ruble at par.  The first denominations were 1, 3, 5, 10, 25, 50 and 100.


a one karbovanet note

Hyperinflation, began almost immediately and by 1994 200,000 and 500,000 karbovanets were needed and a 1,000,000 karbovanets bank note was issued in 1995.  This is a hard way to become a millionaire!


a 500,000 karbovanet note

The karbovanet was replaced by the hryvnia in 1996, at a rate of 100,000 karbovantsiv to 1 hryvnia.   In other words the Ukraine currency had been totally devalued in just four years and during this period many people… who had done everything correctly in the old system saw their financial lives destroyed as pension promises collapsed.

The McMurrins saw this but also saw a body of incredibly talented musicians who were starving so they formed the Kiev Symphonic Choir and Orchestra… 110 Ukrainian singers and an orchestra of 60 musicians from various Kiev orchestras, including the National Opera Theater.

By 1995 they were going strong and were able to perform for U.S. President Bill Clinton during his visit to Kiev.  In November that year, they recorded three compact discs.

After that the McMurrins established Music Mission Kiev Inc., a tax-exempt charity registered in Florida, and began doing tours up and down the United States.

They donated much of their revenues to help the starving pensioners.

This is a perfect example of people seeing problems as opportunity.  The McMurrins have been serving the global community doing good running a business they love.  The business uses a multi-media marketing system. The main interest generator is the group performances, which both earns income and develops a customer base. The performances generate income from performance ticket sales, sales of discs, Ukraine handicrafts sold at performances and donations.

At the performance, the McMurrins have a FREE give away raffle asking for people to fill in their name and address to join the raffle and win prizes at the end of the performance. These names and addresses are collected, kept and then sent a regular follow-up by direct mail that asks for more donations.

The key to successful businesses is the building and focus of the list.

More on this in a moment because pension demographics in America are the issue we need to think about here.   The Ukraine history just gives us a clue…. as well as a solution.

We can see pension demographics at work in Stockton, California.

Last week’s USA TODAY article entitled “Stockton, Calif., tests legalities of city bankruptcies” by Dennis Cauchon and Judy Keen says (bolds are mine):  The bankruptcy of Stockton, Calif., could be the crucial test case that determines whether local governments can use the federal courts to shed burdensome retirement benefits in a way that corporations often do.

The struggling city of 291,000 has been firing police, firefighters and other workers for several years to reduce payroll costs so it can pay retirement benefits and debt. The City Council and city manager decided Tuesday — with regret but little disagreement — that it cannot cut more and, instead, the knife must be taken to pension and health care benefits of former workers.

“We have used every tool in our toolkit to try to resolve our financial situation without going into Chapter 9 (bankruptcy),” says Mayor Ann Johnston. “It truly is bad that we’re in this position, but it’s good that we have a way to resolve our financial situation.”

What’s significant about the Stockton bankruptcy is that a substantial-sized city is confronting head-on a multitrillion-dollar problem facing states, cities and school districts nationwide: unfunded promises for pensions and retiree health care. With unusual frankness, City Manager Bob Deis compares Stockton’s strategy with that of General Motors and American Airlines, recent examples of a decades-old business technique to abandon costly retirement promises by filing for bankruptcy.

“This is a big test case,” says University of Pennsylvania law professor David Skeel. “The conventional wisdom has been until very recently that you can’t touch retirement benefits or labor contracts in bankruptcy court. That conventional wisdom has been rapidly eroding because of the horrendous financial conditions of some cities and the role pensions are playing in the trouble.”

The lesson we can derive from the Ukraine in the 1990s and from  Stockton today is that we should not trust in just our pensions to pay for our future cost of living.

The Western world is a far cry today from the Soviet Union in 1990 but there is one basic similarity.   The mathematics of Ukraine pensions then and Western pensions now have a similarity… too much to pay… too little to pay with.

Promises of the past are clogging engines of economic growth now.  Pension promises require high and growing productivity from young energetic workers.   Pension demographics… aging, unhealthy population…  high unemployment… slow economy mean that the numbers simply  do not work.

These pension problems forces pensioners to stay on the job.  This slows the changing of the guard that is needed to bring new ideas, fresh innovations and young energy to outproduce the demographic tensions.

The McMurrins are a great example because they helped resolve a negative pension demographic mess… ie. helped feed many poor, by using the same economic distortions that created the mess to build an incredible business while doing something they loved in music.

Solutions like this seem like sweet music to me.  How about you?

Think about creating a micro business doing something you love to create income beyond pensions.


Most micro businesses need writing skills either to create or sell a product or service.  Successful businesses also need to know how to build and focus a prospect list.  The McMurrin story is one case study we’ll use on how to earn from writing at our two upcoming writer’s camps.

Stockton, Calif., tests legalities of city bankruptcies