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Post by Deleted on Jan 21, 2011 18:15:50 GMT -5
I'm just curious as to how you would feel. I'm not talking about pensions where the state employees contribute 0%. I'm not talking about early retirement or our DROP (deferred retirement option program that allows people to retire but keep working). I am talking about having to contribute 5% of your salary until retirement (not the 25 or 30 years now but until you are 60 or 62 or 65 or whatever age they decide on). That's 5% less that you don't have to contribute to another retirement option, and it's mandatory. You are "guaranteed" a 2% per year retirement income when you retire. I don't think it would be fair to declare bankruptcy to get out of that obligation. I'm sure this is talking about states who didn't try to fund their pension obligations, but it is still worrisome. In Alabama we have a great pension fund leader who makes sure that if the legislature gives retirees a raise that they fund it. He also makes sure we know how close (or faraway) we are from fully funding it every year. But it just bothers me that states are looking for a way out of their obligations instead of looking for a way to honor them while reducing them (freeze pensions, not offer them to new hires, whatever). I wouldn't be upset if my state said they had to increase my percentage to fund mine. I would only be upset if they collect my hard-earned $$$ that I could put elsewhere for retirement and then declare bankruptcy, taking my money and my old age. Give me the other perspective, guys. You know you want to.
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Plain Old Petunia
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Post by Plain Old Petunia on Jan 21, 2011 20:02:28 GMT -5
California has been trying to raid Cal-PERS for decades. I believe it is grossly unfair and should not be allowed. People in that system are forced to pay into it. It's not public funds up for grabs. So far, they haven't been allowed to touch it.
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Post by Deleted on Jan 21, 2011 20:20:42 GMT -5
I think it's unfair to both taxpayers and gov't workers to promise benefits that can't be funded and to use unrealistic projections. It's unfair to the people who are relying about them in retirement (what do you think about that city in Alabama that stopped paying it's pensions?) and it's unfair to taxpayers who are losing out on basic services while funding pretty cushy retirements (for some.) San Francisco is about to spend more on it's obligations to retirees than it pays for it's budget for police. San Francisco's pension time bomb just exploded, with the city being told it will have to pony up $20 million more than previously expected in the next fiscal year. That will bring the total bill for city government retirees to about $375 million - $100 million more than this year, according to the city Controller's Office. To give that some perspective, $375 million is more than three times the annual budget for the Recreation and Park Department. A big chunk of the increase is the result of a mandatory, 3.5 percent cost-of-living hike for retirees required under terms set out in the City Charter. About $60 million of the $100 million will have to be paid for out of the general fund, the source of the money for most city departments. "Compound the pension payout with the overall economic downturn, and there will absolutely be a reduction in city services," said Supervisor Sean Elsbernd. Worse yet, the following fiscal year, the city's estimated pension payout is expected to grow to $439 million - or about what it costs to run the Police Department for a year. And the year after that? The city is looking at a $532 million payout. Public Defender Jeff Adachi, who floated an unsuccessful ballot measure in November that would have required city workers to pay more into their pensions and health care plans, said even the new numbers don't include the $63 million a year the city kicks in for the estimated 10,000 workers who don't pay anything into their pensions. Most city politicos and all labor leaders adamantly opposed Adachi's measure, calling the health care hikes unfair. They also took aim at a civil grand jury report that sounded the alarm on the pension problem, insisting that the estimates of the coming increases were out of line. They were right on one point. The grand jury's estimates for this year were off - they were under. Read more: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/01/18/BA8P1HARDK.DTL#ixzz1BisRJexK
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formerexpat
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Post by formerexpat on Jan 21, 2011 20:27:28 GMT -5
How is that different than Social Security? I don't believe I will see much, if any of that 12.4% paid during my entire working career.
All the more reason to separate governments from the pensions and funds. Just like the 401k did with the worker and a company. Allow the worker to place it in a vehicle they are comfortable with, whether CD's, bonds, stock market, annuity, UL, etc.
Then again, the promises made by these governments were never covered by the deductions taken from the people's salaries so there will have to be some reductions.
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dancinmama
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Post by dancinmama on Jan 21, 2011 20:36:33 GMT -5
I think it's unfair to both taxpayers and gov't workers to promise benefits that can't be funded and to use unrealistic projections. It's unfair to the people who are relying about them in retirement (what do you think about that city in Alabama that stopped paying it's pensions?) and it's unfair to taxpayers who are losing out on basic services while funding pretty cushy retirements (for some.) I TOTALLY agree. And the example of San Francisco can be repeated in places all over the country. Many private sector companies no longer even offer defined benefit programs because they can see the writing on the wall - that providing them is unsustainable. My DH has worked at a Fortune 500 company for over 30 years and will retire as a SENIOR MANAGER. His annual pension will be less than my girlfriend's. She will retire as a CLERK who has worked less years for a municipality. And those are the facts.
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Post by Deleted on Jan 21, 2011 20:40:13 GMT -5
How about this for gall: Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000. "We believe it is the University's legal, moral and ethical obligation" to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle. "Failure to do so will likely result in a costly and unsuccessful legal confrontation," they wrote, using capital letters to emphasize that they were writing "URGENTLY." Their demand comes as UC is trying to eliminate a vast, $21.6 billion unfunded pension obligation by reducing benefits for future employees, raising the retirement age, requiring employees to pay more into UC's pension fund and boosting tuition. The fatter executive retirement benefits the employees are seeking would add $5.5 million a year to the pension liability, UC has estimated, plus $51 million more to make the changes retroactive to 2007, as the executives are demanding. The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase. "Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board," they wrote. Without naming Yudof, the executives claim that denying their benefit increase would breach UC's code of ethics, place Yudof in a conflict of interest and jeopardize the system's ability to recruit top employees. The 36 executives who signed the letter include Mark Laret, chief executive officer of UCSF Medical Center; Christopher Edley Jr., dean of the UC Berkeley law school; and Marie Berggren, chief investment officer for the UC system. They want UC to calculate retirement benefits as a percentage of their entire salaries, instead of the federally instituted limit of $245,000. The difference would be significant for the more than 200 UC employees who currently earn more than $245,000. Under UC's formula, which calculates retirement benefits on only the first $245,000 of pay, an employee earning $400,000 a year who retires after 30 years would get a $183,750 annual pension. Lift the cap, and the pension rises to $300,000. Read more: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/28/MNDC1GUSCT.DTL#ixzz1BixHwya5You'd think with those nice salaries and the comfy pension they could save some for retirement on their own. Read more: www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/28/MNDC1GUSCT.DTL#ixzz1Bix78vMv
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Post by Deleted on Jan 21, 2011 20:42:58 GMT -5
This is the city in Alabama that defaulted on it's pension obligations - even though it's illegal:
Meggan Haller for The New York Times
PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”
The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.
It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.
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motherto2
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Post by motherto2 on Jan 21, 2011 20:44:41 GMT -5
I don't believe it's fair for employees to pay into a retirement system all their careers and then when they are on the horizon of needing it, suddenly it's not there. I think if there are problems, they should absolutely stop putting new employees into the system, but then that will take new money out of the equation, which is counting on new employees to make the payments for already or soon to be retired employees. The federal Gov't is in the same boat, so it stand to reason that it trickles down. Going to be a mess one day, and it's probably sooner than later.
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Post by ❤ mollymouser ❤ on Jan 21, 2011 21:18:46 GMT -5
Cities can file bankruptcy ~ but States cannot. It will be interesting to see what happens when the matter comes before Congress.
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lurkyloo
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Post by lurkyloo on Jan 21, 2011 21:31:29 GMT -5
I honestly don't think anyone should get a taxpayer-guaranteed pension in excess of $100K/year.
The thing that really bothers me is the amount of fraud that routinely goes into calculating pensions. It's become "normal" in many systems to hugely inflate the final year's total salary (OT, cashing in years' worth of accrued vacation time, promotion for the final day in order to retire at a higher pay grade) and then use that to calculate the pension amount. Too lazy to dig up the link, but there was a NYT piece where they interviewed a 44-year-old retired police officer who saw nothing unusual or unfair about his $200K+ pension, with COLA guaranteed.
Too much back-room dealing, too much wink-wink nudge-nudge.
I don't think it's right to cut current retirees off cold turkey. Doesn't bankruptcy court typically divide assets such that creditors (in this case retirees) get at least part of what they were owed? However, I'd be 100% behind revisiting all current pensioners and recalculating benefits to eliminate all artificial inflation.
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dancinmama
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Post by dancinmama on Jan 21, 2011 21:56:18 GMT -5
I don't believe it's fair for employees to pay into a retirement system all their careers and then when they are on the horizon of needing it, suddenly it's not there. I think if there are problems, they should absolutely stop putting new employees into the system, but then that will take new money out of the equation, which is counting on new employees to make the payments for already or soon to be retired employees. The federal Gov't is in the same boat, so it stand to reason that it trickles down. Going to be a mess one day, and it's probably sooner than later. motherto2: I agree with you on all counts. Unfortunately, the problem has been ignored for a long time at all levels of government. I don't have a clue how they can solve this one without drastically hurting everyone concerned (taxpayer and civil servant).
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dancinmama
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Post by dancinmama on Jan 21, 2011 22:00:18 GMT -5
I honestly don't think anyone should get a taxpayer-guaranteed pension in excess of $100K/year. The thing that really bothers me is the amount of fraud that routinely goes into calculating pensions. It's become "normal" in many systems to hugely inflate the final year's total salary (OT, cashing in years' worth of accrued vacation time, promotion for the final day in order to retire at a higher pay grade) and then use that to calculate the pension amount. Too lazy to dig up the link, but there was a NYT piece where they interviewed a 44-year-old retired police officer who saw nothing unusual or unfair about his $200K+ pension, with COLA guaranteed. I think that this is/has been more common than people realize. For the retirees it's been like taking candy from a baby.
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Post by Deleted on Jan 21, 2011 22:49:34 GMT -5
I honestly don't think anyone should get a taxpayer-guaranteed pension in excess of $100K/year. The thing that really bothers me is the amount of fraud that routinely goes into calculating pensions. It's become "normal" in many systems to hugely inflate the final year's total salary (OT, cashing in years' worth of accrued vacation time, promotion for the final day in order to retire at a higher pay grade) and then use that to calculate the pension amount. Too lazy to dig up the link, but there was a NYT piece where they interviewed a 44-year-old retired police officer who saw nothing unusual or unfair about his $200K+ pension, with COLA guaranteed. I think that this is/has been more common than people realize. For the retirees it's been like taking candy from a baby. Yep, my parents next door neighbor did just that. The last three years before he retired he worked insane hours, picking up all the overtime he could muster or have enough energy to do. And where he worked, the people with seniority or were close to retirement had fist pick for overtime.
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Frappuccino
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Post by Frappuccino on Jan 21, 2011 22:55:23 GMT -5
I'd go for the not over $100k/year plan. I'd hate for the regular common folks to get the shaft. It would hurt business all over too.
I wonder, since the government pensions invest in other businesses, would it hurt the entire economy if government pensions all went away? Would the politicians cut taxes if less taxes were needed to fund pensions? Or, would they waste that money on something else.
I just think pensions and illegal immigrants are things to keep our eyes off of the real issues which are politicians doing the wrong things with their power and our money.
I think the real reason tax codes are so complicated is to intentionally create loopholes so only certain people can avoid the taxes while regular people get the shaft.
The politicians could help ease the budget, the pension, illegal immigration, and welfare problems tomorrow if they wanted too. They read newspapers. They aren't stupid. They choose not to fix these things for their own reasons.
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Post by Deleted on Jan 22, 2011 0:25:50 GMT -5
Here's part of an article from the NY Times about policy makers trying to figure out a way for state to go bankrupt: A Path Is Sought for States to Escape Their Debt Burdens By MARY WILLIAMS WALSH Published: January 20, 2011 Policymakers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers. Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign. But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid. Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides. Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors. “All of a sudden, there’s a whole new risk factor,” said Paul S. Maco, a partner at the firm Vinson & Elkins who was head of the Securities and Exchange Commission’s Office of Municipal Securities during the Clinton administration. For now, the fear of destabilizing the municipal bond market with the words “state bankruptcy” has proponents in Congress going about their work on tiptoe. No draft bill is in circulation yet, and no member of Congress has come forward as a sponsor, although Senator John Cornyn, a Texas Republican, asked the Federal Reserve chairman, Ben S. Bernanke, about the possiblity in a hearing this month. House Republicans, and Senators from both parties, have taken an interest in the issue, with nudging from bankruptcy lawyers and a former House speaker, Newt Gingrich, who could be a Republican presidential candidate. It would be difficult to get a bill through Congress, not only because of the constitutional questions and the complexities of bankruptcy law, but also because of fears that even talk of such a law could make the states’ problems worse. www.nytimes.com/2011/01/21/business/economy/21bankruptcy.html?bl
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Post by BeenThere...DoneThat... on Jan 22, 2011 9:51:55 GMT -5
<<< Give me the other perspective, guys. You know you want to. >>>
...sadly, life is not fair...
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on Jan 22, 2011 13:24:59 GMT -5
Editorial from our local (California) newspaper this morning on this topic: One of the worst ideas to come out of Congress in recent years is a proposal to allow debt-ridden states to declare bankruptcy. If states got the right to discharge their financial obligations through bankruptcy, it would create more fiscal problems than it would solve. This silly talk needs to stop immediately.
California, which has a budget gap approaching $28 billion over 18 months, must get its finances fixed the old-fashioned way -- stop spending more money than it takes in. Allowing states to file bankruptcy is a gimmick that diverts attention from the tough but necessary work of bringing expenses in line with income.
The New York Times reported Friday that some in Congress are considering a change to allow states to file bankruptcy. Under current law, states cannot go to federal bankruptcy court for financial protection.
In California, Treasurer Bill Lockyer quickly spoke out against the proposal:
"To the folks in Congress cooking this baloney: Don't bother. States didn't ask for it. We don't want it. We don't need it. Bankruptcy would devastate states' ability to recover from the recession and make the infrastructure investments that create good jobs."
Some support state bankruptcy as a way to get out from under unsustainable public pension obligations. Lockyer said that California has a plan to pay for its pension obligations, and bankruptcy is not part of it.
"We are dealing with them by reducing benefits and increasing employees' contributions, among other moves," Lockyer said in a written statement. "With respect to our budget shortfalls, we have the tools to fix them without taking a wrecking ball to our economies and taxpayers."
There could be unintended consequences of the bankruptcy proposal. Mere talk of state bankruptcy could drive up interest rates that states must pay for their bonds if investors believe that the bonds won't be as secure in the future.
The New York Times reported that House Republicans, and senators from both parties, are looking at the bankruptcy issue. Former House Speaker Newt Gingrich has also pushed the idea. That caused Lockyer to say that California would "pass on the Gingrich Kool-Aid."
States must fix their finances on their own and not look to Congress for easy answers. Read more: www.fresnobee.com/2011/01/21/2242160/editorial-congress-should-reject.html#ixzz1Bn23k2zx
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Post by kygirl on Jan 22, 2011 13:46:10 GMT -5
I would be very upset with this. I have been contributing 9% of my pay for many years and my employer has matched it dollar for dollar. If the state decided to confiscate the fund, that would be 18% of my pay down the drain. I have been funding additional retirement just in case, but that would be a large amount of money for them to take, similar to if they decided to take other people's 401k's. This is what I always say. It's really not fair to take away the pensions. Yes, I understand that life is not fair. HOWEVER, many workers who will receive government pensions did not pay into social security and had no 401K option offered to them. Instead, they were told to pay into the pension plan. I understand that just like pensions, social security may not be there for the younger people. However, the social security tax is only around 7.5%. How angry do some people feel that they paid into that, and they might not receive it? (Although personally I think it will be there in some form, and will not go away completely). Now, think how you would feel if you had to pay in about 20% and it might not be there at all? Also, most who pay into social security also have another company supplied tax advantage account to pay into for retirement savings. A lot with pensions do not, and also did not pay into social security because their income is not seen as "earned income". If pensions go away, and there is no social security option for them, what are they supposed to do? I do, however, agree with the suggestion of not allowing new workers to enter a pension system. Offer them other retirement options and allow them to start paying into social security, which will also help fund it (although I realize it won't solve the problem). The reason a lot of government jobs initially offered a pension is because at the time they were lower paying jobs. That is not the case any longer. Now, someone doing a government job now earns more, on average, than someone doing the same job in industry.
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dancinmama
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Post by dancinmama on Jan 22, 2011 14:36:47 GMT -5
KentuckyGirl: I think at this point it is the size of the pension that was promised. Too many public service workers' pensions replace too high a percentage of their earnings.
If someone can replace their salary at a rate of 2% for every year that they worked, that means that after 30 years of service they get 60% of what they earned in their HIGHEST earning years; work 40 years and that becomes 80%.
Even if they have to contribute 5 or 10% of their gross from day one into a pension fund, their total contributions would come nowhere close to the payout (kind of what people are complaining about regarding social security).
Example: For ease of math's sake, let's just say that someone makes $100K for 30 years and has to pay 5% into a pension fund. That would be 5% of $3M or $150,000 in total contributions. If after 30 years of service they can retire with a 60% pension that's $60K a year. They recoup all their contributions in a little over 2 years AND after only 30 years of service. Someone could easily retire at age 55 and collect for 20-30 years AND with COLA increases.
I think that is the bigger problem right now.
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mithrin
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Post by mithrin on Jan 22, 2011 14:40:15 GMT -5
I agree that they need to phase out defined benefit plans for public employees. Replace that with contribution plans like the private sector has and shift the investment risk to the workers instead of the taxpayers (again, same as private sector workers).
Also, they need to restructure the pension system for current employees. Stop basing the pension on the last 1-3 years of income where overtime is included. Either base the pension on the base salary (and then don't withhold the pension percentage from overtime pay), or base the pension on base salary + average overtime hours worked over the entire career (take all the overtime hours worked over 30 years and divide by 30). Taxpayers shouldn't be paying extra because retirees know how to game the system for their last year of work. Whether to count lifetime overtime worked or not could even be left up to the industries, or even individual employees; do you want to pay into the pension on your overtime pay and get a bigger pension, or keep your overtime check now and get the pension on your base salary?
As to the UC execs, whether I sympathize with them or not depends on whether they are having pension contributions taken out of their pay above 245K or not. If the UC is taking pension contributions from their whole salary, but only basing the pension on part of it, they have a point that it's unfair. Though my solution would differ from theirs: have the UC stop taking pension contributions out after 245K, and let them be responsible for using the money to save for retirement if the 183K isn't going to be enough. To be fair, they should also get back all the contributions they've made in the past on pay over 245K also.
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Post by Deleted on Jan 22, 2011 15:37:53 GMT -5
I think Lockyer is falling on the hopeful side. State, county and local pensions are severely underfunded, triggering laws that require larger contributions to make up the shortfall. Every dollar that goes there is now being taken out of budgets for education and other needs. It's terrible for our future economy to be spending so much on the older generation (medicare, social security, pensions) while this generation and younger ones are faced with staggering costs for higher ed, overcrowded and underachieving public schools and higher taxes.
Contributions are jumping by leaps and bounds - it's not sustainable for budgets.
This from the LA Times:
The unfunded pension liabilities of California's state and local governments exceed $700 billion. We can't fix the budget without reducing public employee retirement benefits.
Just since Christmas, we've learned that San Francisco's retiree health plan is $4.4 billion in the red, that Santa Clara County's fire chief will collect a hefty government paycheck on top of his $200,000 annual government pension, and that UC's latest tuition increase will go mostly to pension debt even as UC's highest-paid executives are threatening to sue for more benefits. Retirement scandals are as common as weather reports, and voters are fed up.
Gov. Jerry Brown's commitment to make the tough decisions required for the long-term health of California presents the perfect opportunity to reform the state's public pension systems, but his proposed budget solutions do not include any significant changes in this crucial area.
With the unfunded pension liabilities of California's state and local governments exceeding $700 billion, some state leaders now admit we cannot fix our budgets without reducing public employee retirement benefits. Near the end of his inaugural remarks, the governor said, "We will also have to look at our system of pensions and how to ensure that they are transparent, actuarially sound and fair — fair to the workers and fair to the taxpayers."
During the last decade, California state government payments for retirement benefits have grown at an alarming and unsustainable rate, exceeding $5 billion a year, more than state support for the entire UC system. These huge and growing slices of the budget pie are needed to pay for average state retirement packages now valued at more than $1.2 million. The taxpayers who pay for those retirement benefits have an average of $60,000 saved for their own retirement.
Local governments are facing pension bills that are starving vital services. Faced with mounting long-term budget deficits, Mayor Antonio Villaraigosa recently told labor leaders, "The days of unsustainable pensions are over." In 2002, Los Angeles taxpayers contributed just under $100 million to the Los Angeles City Employees' Retirement System, and it was fully funded. Today, that taxpayer contribution is more than $400 million, and the system is underfunded by more than $2.3 billion.
Dozens of cities are struggling to find solutions to growing retirement costs. The most sensible approach is a state constitutional framework for public retirement plans that is economically sustainable and meets Brown's test of fairness to workers and taxpayers.
Solving the crisis will take an ongoing public discussion of what voters in the state think is fair. Our organization has started asking Californians to consider a series of questions as we begin the work of fixing a broken system. Should public employees have different retirement plans than those available to employees of private companies? Should they pay half the cost of their benefits? Should public safety employees have different retirement plans than other government employees? Should retired public employees receive healthcare for life? These are all questions that need to be answered before the state tackles comprehensive pension reform.
Californians also need to familiarize themselves with the system that exists. Taxpayers are often shocked to learn that they are paying 100% of the cost of pension and retiree healthcare benefits for many public employees. When employees must contribute their own money toward their retirement, they generally opt for benefits they can afford, and if workers are given the opportunity to opt out of retiree healthcare benefits, many will continue to work until they are covered by Medicare. Delaying retirement just five years would, on average, cut pension costs in half.
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Post by kristi28 on Jan 22, 2011 17:15:50 GMT -5
The thing that aggravates me a great deal about this issue is that a big part of the problem with the state pension (at least in MO) is what the state did during good years.
MOSERS (the state employee pension) is in rough shape and the state is crying about it. In fact, they tried to force a merger between their plan and the plan of the University of Missouri System. Some things I don't understand caused all state university employees to be on MOSERS except for those who work at the four UM System schools. The plan for the UM System schools is in relatively good shape, despite paying out similar or maybe better benefits.
The difference between the two plans is what happened during good years. Apparently, UM System went ahead and put in the contributions that were expected to be needed and also acquired market gains. The state, OTOH, relied on the market to make the "contributions" and spent the money elsewhere. Now, the state is sobbing b/c the plan is way short. The fact that they were in the habit of spending the $$ that should have been going into MOSERS makes the pain worse.
As a young(ish) employee, I would rather have a 403b anyhow, but I find it hard to feel bad for the state budget when they obviously brought much of the problem on themselves.
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Deleted
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Post by Deleted on Jan 23, 2011 14:02:35 GMT -5
Kristi is right. They did this in Alabama as well . . . not funding the pension system in good years and now finding that (surprise!) they have to make up a major shortfall during the downturn.
Similarly, they ran the Prepaid Affordable College Tuition (PACT) plan like a pyramid scheme. The downturn in the market revealed the truth.
I'm saving outside the pension for retirement, but remember the pension contribution is mandatory and not optioinal. They should at least owe me the same interest compounded that they charged me to buy five years about . . . 8%.
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olderburgher
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Post by olderburgher on Jan 23, 2011 14:25:20 GMT -5
OP I agree with you. It is nice to rail against government pensions and cite examples where someone gets a pension in excess of $100k annually but check on what is real and what isn't Hello out there, these are the exceptions to the rule not the rule. Yes I get a government pension. I get under $2k a month or about $22k a year after 25+ years and my wife gets $1400 a month or about $17 a year for 25 years teaching. We both contributed to these pension and we aren't getting rich here so look at reality not exceptions which don't prove the rule and then render your judgement. After all you don't judge all doctors by the conduct of that butcher who was caught in Philadelphia last week, do you?
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dancinmama
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Post by dancinmama on Jan 23, 2011 15:24:52 GMT -5
OP I agree with you. It is nice to rail against government pensions and cite examples where someone gets a pension in excess of $100k annually but check on what is real and what isn't Hello out there, these are the exceptions to the rule not the rule. Yes I get a government pension. I get under $2k a month or about $22k a year after 25+ years and my wife gets $1400 a month or about $17 a year for 25 years teaching. We both contributed to these pension and we aren't getting rich here so look at reality not exceptions which don't prove the rule and then render your judgement. After all you don't judge all doctors by the conduct of that butcher who was caught in Philadelphia last week, do you? The problem is that even if the number of people who work the pension system for all they can get (and who can blame them if they're playing by "the rules") is a minority (and no one REALLY knows how many are the exception and/or the rule), when you're talking excessive pensions over many, many years, it adds up to big bucks during a time when pensions are underfunded. Personally, I have no problem at all with public workers receiving their pensions (at this time) - it's pensions far in excess of what would be considered reasonable and/or normal compared to the private sector that I think most people have a problem with. And now, almost all pensions in the private sector are becoming extinct so.....
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lurkyloo
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Post by lurkyloo on Jan 23, 2011 15:34:44 GMT -5
(er, olderburgher: not trying to imply your point is automatically invalid, but $1400/mo x 12 mo/year divided by 25 years = $672 a year for every year of teaching. Also, keep in mind that this is not a one-time payment, and many people can be retired for 25 years...so dividing it by number of years taught isn't necessarily fair.)
There was an opinion piece in the local paper some months ago pointing out that most state pensions are under $30k/year. True, but at the standard advised 4% drawdown, that still adds up to 750K+ per retiree (many retire earlier than 65) that the state has to have on hand, *per retiree*. Multiply by the number of retirees on the system, and that adds up to an awful lot of money...before you even get into the really high pensions. The legislators were criminally incompetent in making these promises without ensuring funding; the question now is how do we fix them.
Let me put this in another light: the LA times had a recent piece about utility company pensions. I *think* it was DWP, but anyway the utility company was planning a 7.5% hike in utility rates. It was entirely to cover utility pension fund shortfall. How would you feel about that?
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The J
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Post by The J on Jan 23, 2011 16:29:47 GMT -5
Even if a change in Federal law allowed pensions to be included in a state bankruptcy, you'd have to look at the actual laws of the individual state. For example, in NY the pensions are guaranteed by the state constitution, so that would have to be amended before the pension could be discharged.
Also, this would simply shift a lot more of the burden on the PBGC, and therefore the Feds
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Deleted
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Post by Deleted on Jan 23, 2011 17:31:06 GMT -5
I know a lot of highly paid employees "spike" at the end, but many of us taught summer school, did cheerleading sponsor stints, etc. in our early years. I taught at a local university way back then. I paid the pension $$$ for all of these even though it will be meaningless in the end because salaries have really gone up since I started at $7800 back in 1974.
I just wanted to present the other side of spiking. That's called "making a living."
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dancinmama
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Post by dancinmama on Jan 23, 2011 18:48:36 GMT -5
I know a lot of highly paid employees "spike" at the end, but many of us taught summer school, did cheerleading sponsor stints, etc. in our early years. I taught at a local university way back then. I paid the pension $$$ for all of these even though it will be meaningless in the end because salaries have really gone up since I started at $7800 back in 1974. I just wanted to present the other side of spiking. That's called "making a living." I understand what you're saying, but if pension is calculated based on the earnings in the later years of service, what does that matter?
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Deleted
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Post by Deleted on Jan 23, 2011 21:37:15 GMT -5
So what would happened to those that contributed more than the pension required? I mean I would be one pissed off SOB if that was me.
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