Pension Crisis

Reverse Robin Hoods

Public worker pensions rob the young and poor to pay the old and rich.

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"We have opened up a new sport for America's elite," economist Dean Baker shrilled in a widely circulated December 2013 column for truthout.org. The sport? "Pension theft." Baker is panicked, like so many on the left, about the prospects for public sector pension benefits in cities where legislators are facing bankruptcy and starting to make hard decisions about trimming benefits for future government employees. Cutting pension payouts instead of raising taxes to pay for the underfunded promises, Baker argued, is tantamount to stealing: "Rather than inconvenience all those rich folks at the Chicago Board of Trade or other highly successful businesses with a larger tax bill, the plan is to stiff the firefighters, the schoolteachers, and the people who collected garbage for 30 years."

The fights over who is going to get paid and who is going to get screwed in fiscally distressed cities can seem like a game, albeit one with wildly arcane rules. But it's the public sector unions—especially the ones representing police and firefighters—who are the most adept at playing it.

Baker is peddling nonsense, but he is inadvertently right: There has been a massive theft, totaling hundreds of billions of dollars. But the real victims of pension graft are current and future taxpayers, who face ever-higher taxes and ever-lousier public services. The beneficiaries of this gravy train are the very people whose plight Baker bemoans: public sector workers.

Thanks to the pension-hiking bonanza of the last two decades, the public sector pension system, even in a time of rising municipal bankruptcy, is a massive redistribution of wealth from the young to the old. It also is a transfer from some of the nation's poorest residents to some of the nation's best-paid retirees. The few pension reductions that legislators have passed across the country have mostly been for future employees, not current recipients. The very fact that unions are getting hysterical about new hires being offered a slightly less generous benefits package demonstrates just how unmoored the debate over pension reform has become.

The Illinois Supreme Court tossed the state's efforts to slightly trim pensions for current employees. And only one bankrupt city is cutting vested pension benefits for current retirees. That's the post-apocalyptic crime scene of Detroit—and even Detroit's emergency manager is executing just a modest trim, a 4.5 percent cut of current pensions and reduced cost-of-living increases. While those pensioners are certain to be less than thrilled about having their promised payouts crammed down, what's happening to them is also happening to all of the city's creditors. It is "theft" only to the degree that all bankruptcies deprive some people of the full amount they are owed. Indeed, some bankrupt cities' creditors are recouping only pennies on the dollar from their investments, while pensions remain completely untouched.

Kids Pick Up the Check

Occasionally, a city will try to reduce benefits and pay when in extremis. In 2012, the mayor of Scranton, Pennsylvania, cut his city workers' pay to minimum wage for a while when the city went broke. The firefighter, police, and public works unions then took the city to court and won, but the mayor still didn't have money to pay them. (Eventually, the state provided a bailout.)

But such direct confrontations between elected officials and unions are rare. Mainly, despite heavy breathing from the likes of Baker, politicians shower largesse on powerful union members and impose debts on future generations.

That's how the defined-benefit pension systems that the public sector demands are designed. In the private sector, employees typically receive defined-contribution plans (e.g., 401(k) accounts), to which employees divert a portion of their paycheck. Sometimes the employer matches a portion of the set-aside. The money is invested in stocks, bonds, or other instruments. When the funds do well, the savings grow, and vice versa. Upon retirement, that employee receives the proceeds in the account. It's pretty simple and devoid of accounting gimmicks or hard-to-tally future debts and liabilities.

Protesters
Reuters/Rebecca Cook

Most government employees—and in the old days, many workers for major corporations—receive defined-benefit plans. They are guaranteed a certain level of payout based on a formula. Pension funds invest the money contributed by the employee and employer (in many systems, the government employer makes the entire contribution); those funds then make a prediction about the system's overall rate of return. When the market is booming, the unions say that there's plenty of money to go around and lobby for richer benefits. When investments don't do well, "unfunded liabilities" go up and legislators put more tax dollars into the system—or worry about it later (or in some extreme cases, never).

It isn't quite a Ponzi scheme like Social Security, but the defined-benefit system does foist massive "unfunded" obligations on future generations. It privatizes gain (workers enjoy the benefits in good times) and socializes risk (taxpayers are on the hook for shortfalls). And these pension promises are given a privileged status at the top of a government's list of obligations: Virtually everything else must be cut first if the money ever runs out.

"This is your issue," California Pension Reform President Dan Pellessier recalls telling a group of students who were touring the California Capitol a few years ago. "This system is accumulating bills you and your children are paying off. This is where you should apply your efforts."

The system's intergenerational wealth transfer has come to the fore in recent months. In November the Board of Regents of the University of California (UC) voted 14–7 to raise tuition by as much as 5 percent a year unless the state legislature provides it with at least $100 million more a year. This after tuitions already doubled over the past decade.

While UC President Janet Napolitano touted all the new programs and students the tuition increases would fund, closer analyses found that something else (aside from the usual bureaucratic bloat) was driving the hefty increases: unfunded pension liabilities and soaring health care costs. "The UC system is notorious for its two-decade long pension contribution holiday, during which it failed to contribute to its retirement systems," explained the reform-oriented group California Common Sense, founded by Democratic pension reformer and Stanford lecturer David Crane.

In the late 1990s, the university had surplus assets and decided to just stop making its annual contributions to shore up its pension fund. It instead relied on optimistic predictions about its investments' rate of return. The returns fell short, and now the system is underfunded. "The UC also failed to set aside almost any assets to prefund its retiree healthcare plan, which has a funding ratio of just 0.3 percent," the California Common Sense report concluded.

Of the 10,000 California state employees who earn more than Gov. Jerry Brown, more than 7,000 of them work in the University of California system. So students will go more deeply into debt, in part to pay for an older generation of well-heeled retirees—a transfer of assets that will affect most students' long-term bottom line, given that 55 percent now graduate with college-loan debt. It's not fair, but it's endemic in the nation's entitlement system.

As funding levels fall off, older workers often throw younger ones under the bus. Sometimes the bus cliché is almost literal. In one contract negotiation I covered in Orange County, California, in the mid-2000s, the bus drivers' union—controlled by senior drivers nearing retirement—backed a contract that boosted their retirement benefits at the expense of entry-level pay to help offset the costs. It's not unusual for union negotiations to turn into generational warfare.

Pension Puffery

Younger folks are starting to see how ugly the picture is. A snarky Philadelphia magazine column from 2013 was titled: "Baby Boomers: Five Reasons They Are Our Worst Generation." Three of those five reasons involve debt spending. "The boomers have created liabilities that will take generations to pay off," wrote Gene Marks.

The beneficiaries of the current system peddle emotional falsehoods to keep the younger generation from looking too closely at the numbers. For instance, police officers and firefighters trumpet the myth that they deserve to receive such large pensions because they don't live long after retirement. Should thirty-something workers be crass enough, they ask, to deprive these heroes of a few years of comfort after a life of public service?

This is buncombe. The nation's largest state pension fund, the California Public Employees' Retirement System (CalPERS), has been a muscular advocate for California's mad pension-increasing spree since the late 1990s. But the "we die early" arguments were too much even for CalPERS, which, despite its union advocacy, is a font of useful actuarial data.

The fund in 2008 produced a report debunking various pension myths. Myth No. 4: "Safety members do not live as long as miscellaneous members." In fact, most public-safety officials (police, firefighters, prison guards, etc.) retire in their early 50s and live into their mid-80s, the report found. The longest-living category of public employee is a police officer, followed by a firefighter. A 65-year-old male "safety" retiree is likely to live until almost 83, and his female counterpart will make it past 86. It's wonderful that these folks are living long, healthy lives, but 35 years of taxpayer-funded retirement seems excessive.

And the obligation doesn't always end when the retired firefighter finally ascends the big extension ladder to heaven. One actuary jokingly tells me about a new term, "the Viagra Effect." Pensioners are living long lives. Male retirees often marry much younger wives, who can receive spousal benefits for many decades. Actuaries need to account for this.

Baker and other pension advocates argue that the average public sector pension is only $33,000 in Illinois and $18,000 in Detroit. This is true but misleading. These averages include everyone in the retiree pool—even those who retired long before legislators played pension-hiking Bingo, or worked only part time, or left the system after a short stint. Meanwhile, the average private pensioner receives about $8,600 a year.

The formulas to assess pension payouts are a key source of fiscal instability, and tell a clearer story than lump-sum averages. In California, highway patrol officers are guaranteed 3 percent at 50—meaning they can retire at age 50 with 3 percent of their last years' pay times the number of years worked. So an officer who started at 20 can retire at 50 with 90 percent of her final pay, plus "enhancements." And an officer who has worked at least 20 years and retired in the last few years receives an average pension northward of $98,000.

"Miscellaneous" workers receive less generous pensions, but they still often can retire in their mid-50s with 80 percent of their final, oftentimes spiked pay. The state uses 99 categories of special pay that can add to a public employee's salary. For instance, librarians get special bonuses for helping patrons find books, and employees get salary spikes for filling in for their bosses when they are away. The CalPERS board decided last summer that those categories can be used to inflate the final pension payout even for new hires—effectively undermining a main part of the only serious pension reform California has passed. (That was the Public Employees' Pension Reform Act of 2013, which slightly reduced pension formulas for new hires, restricted pension spiking, and included a few more reforms designed mainly to grease the skids for passage of a tax-increasing initiative.)

The $200,000 Lifeguard

This isn't just unfair, it's expensive. The number of public sector employees receiving pensions of more than $100,000 a year in California is growing exponentially. The last 15 years have seen massive increases in the benefits bestowed by legislators and councilmembers. What's worse, most of these boosts were retroactive, going back to the day new retirees started working. Try even imagining that in the private sector.

News reports have highlighted many absurdities—city managers making $500,000 a year, lifeguards who earn packages worth $200,000. These often are depicted as aberrations, but such "aberrations" add up. The median compensation package for a firefighter in California is $175,000. In bankrupt San Bernardino, a typical firefighter earns 10 times the city's per-capita income. The city's salary schedule is littered with $200,000-plus employees.

It's not just the young, destined to bankroll these generous pensions for decades to come, who are getting screwed. Maintaining astronomical pay and benefit levels has required cities and states to cut back on present-day services. In formerly bankrupt (and still fiscally troubled) Vallejo, California, officials chose to shut down community centers and reduce police staffing rather than shave off even a small sliver of the benefits to current employees and retirees.

The poorest cities have felt the most impact, but public sector union greed has harmed wealthy ones, too. Former San Jose Mayor Chuck Reed makes a progressive case for reform. Pension costs have increased 350 percent over a decade in that city, in the heart of Silicon Valley. Reed argues that pension-grabbing corrupts the concept of public service and threatens the quality of life for future generations.

Reed's 2012 pension reform initiative received 70 percent of the vote in his heavily Democratic city, but it was then gutted in a court case. The courts have established a de facto California Rule—once a pension is approved it cannot be shaved, even on a go-forward basis.

The initiative would have increased employee contributions to help pay for their pensions—something the city thought it could do (despite the California Rule) because of provisions in the city charter. Some city unions challenged the measure and a Santa Clara County judge agreed the city cannot impose these costs on existing workers. The city was allowed to reduce pay—but the pension issue was the heart of the reform.

So short of bankruptcy, cities can do almost nothing about pensions other than cut services and/or raise taxes. Every municipal tax hike is functionally an exercise in paying for pensions, given the reality that money is fungible and pensions nationwide are dramatically underfunded.

The numbers can get absurd. As the Manhattan Institute's Nicole Gelinas explained in the New York Post in 2013, "New York pays more police in retirement than to patrol our streets." The same goes for Chicago and some other cities. "Eventually retirees will outnumber active workers by a ratio of nearly 2 to 1 in some CalPERS plans," The Sacramento Bee reported in November. Reed joked to Vanity Fair that eventually his city will be left with one worker: the guy who sends out pension checks.

'Math, Not Politics'

Union-controlled pension funds love to berate Wall Street, yet they are increasingly dependent on Wall Street returns to paper over their crazy projections. When California passed a bill that in 1999 triggered a pension-boosting bonanza, CalPERS predicted investment returns that "implicitly required the Dow Jones to reach roughly 25,000 by 2009 and 28,000,000 by 2099," said David Crane in 2009 testimony to the Senate.

Rhode Island's Democratic pension-reforming governor, Gina Raimondo, has a tart response to pension apologists: "This is math, not politics." Raimondo was a financier with little political experience when she ran for treasurer in 2010, the Washington Post editorial board explained in a September profile. She championed a bill that reduced pensions, making the same "progressive" case (without reform, services will be slashed) as Reed and other Democrats.

Her state's math was obvious, per the Post: "In Rhode Island's case, pensions for the state's 21,000 retired public employees were soaking up 10 cents of every dollar of state tax revenue; that would have risen to 20 cents in just a few years. The state's pension fund, already underfunded by some $7 billion, was spending more than it took in; it would have been completely broke in 25 years or less."

Here's the latest math for the rest of the country, from Bloomberg: "The 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities, showing that investment returns can't keep up with ballooning obligations, according to Moody's Investors Service. The 25 biggest systems by assets averaged a 7.45 percent return from 2004 to 2013, close to the expected 7.65 percent rate. Yet the New York-based credit rater's calculation of liabilities tripled in the eight years through 2012."

So even when pension funds have recently come close to meeting their unreasonably optimistic predictions, their shortfalls are still growing, because the promises are too high and the contributions from employees too low.

For now, the unions can keep gloating about their political and legal victories. But eventually young people will get wise to the nature of this generational theft. If that happens, wealthy retirees better hope these younger folks have more compassion for them than the retirees have had for the rest of us.

NEXT: The New Old Age: Reason's Special Issue on Aging, Pensions, and Immortality

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  1. Boy I knew it was bad, but to not be able to use the courts to restrain the outflow is absolutely nuts.
    With the kind of money some of them make means that the could well fund themselves. So that means most of them don’t care since they know they will be gone and have no need to care.

  2. Heck yeah dude that is how we roll with it.

    http://www.AnonWeb.cf

    1. You must be a public sector retiree-bot!

      1. He was promised a certain amount of voltage in the future, and that means he earned it!

    1. RIGHT?!?!?

      1. *reddens in anger*

        ANOTHER DAY OFF?!?!?!

        1. LET’S GIT THESE MUTHAFUCKAS….
          *narrows eyes*

          1. “This situation absolutely calls for a really futile and stupid gesture to be made on somebody’s part. And we’re just the guys to do it!”

        2. When does the rioting begin? I have a flaming mattress ready to throw in the corridor.

          1. I hope to god you’re not carrying that thing around.

          2. The prep is the most important thing about the flaming mattress maneuver. Best not to be….PREMATURE with it, though…

        3. what the heck?! This place is becoming like Somalia! We need a strong person at the helm…someone who can make the morning links run on time!

          1. Morning links…..mmmmmmmmm…….sausage…….aghagh

    2. They were redistributed to a more vote-rich constituency.

      1. Of the 10,000 California state employees who earn more than Gov. Jerry Brown,

        Really? No snark, just hummmm.

        1. Sorry Doc, posted wrong place.

        2. The thing is, I’d be willing to believe that there are 10,000 Califirnia State Employees who are WORTH more than Gerry Brown.

          ‘Course, those aren’t the ones being PAID more….

    3. They’re just waiting for me to get impatient and spam them here, then they’ll post them. They know I’m too old for a second go, so once I spooge I’m done.

      1. *Looks around nervously for USFWS*

        Organic rhino horn?

        1. You are thinking of tiger dick, I think. Rhino horn is for fever.

            1. Only if you are gay.

      2. Paging (IIRC) Warren’s Strapon ….

      3. and Harry Reid’s swing!!

        1. Appearing tonight in Las Vagas, Harry Reid takes the stage to entertain you with the sounds of his swinging organ!

    4. They’re putting some extra time into epic alt-text…

      1. I heard they’re also bringing back our ability to use *blinking fonts*!

        1. You don’t know the power of the side.

          1. Damn squirrels, taking my things.

  3. “Rather than inconvenience all those rich folks at the Chicago Board of Trade or other highly successful businesses with a larger tax bill, the plan is to stiff the firefighters, the schoolteachers, and the people who collected garbage for 30 years.”

    Naked appeal to emotion; what can’t it do?

    1. Well come on, it’s not like those firefighters, schoolteachers, or garbage collectors got any compensation during those 30 years.

      1. I can certainly understand people being upset if they don’t get the compensation they were promised.
        But if you want to work for government, that is a risk you have to take. Governments can only ignore fiscal reality for so long. And the legislature can change the contract terms any time it wants to.

        1. They should have demanded the pensions be fully funded at the time if they wanted that security.

        2. But if you want to work for government, that is a risk you have to take.

          Public workers are not special snowflakes and if they wanted their better pay, they should negotiate it into their weekly salaries.

          Also, maybe if they’d drop their healthcare benefits, governments could afford to pay them their pensions. Healthcare is a ravenous monster that gobbles up productivity and spits out meager life extensions 90% of the time.

        3. That “compensation they were promised” has another name – a CONTRACT.
          The Constitution prohibits states from passing laws “impairing the Obligation of Contracts”, Article 1, Section 10.
          That’s why only future employees pensions can be altered.
          I’m also surprised about libertarians being so willing to protect all of the other “public services” they are worried that will get cut, to pay for the promised compensation. I thought it should only be necessary costs – anyone want to argue that that is all that is paid for?

  4. I don’t think retirees should be treated any worse, or better, than any other similarly situated creditors. But here’s a wild idea that doesn’t involve any concerns about reneging on relied upon promises: if the governments are short do less now and in the future. Decriminalize things and hire less cops. Cut back benefits programs and prioritize projects. When normal people are short they think about how to spend less now and in the future more than they think about how to get out of bad past spending. Or they should. Crazy, huh?

    1. Deep dish Somalian abortion roads for the children.

      1. You missed immigration and circumcision.

    2. But…but…that’s austerity! That’s double plus ungood! Just ask Paul Krugman! or Tony!

  5. “Rather than inconvenience all those rich folks at the Chicago Board of Trade or other highly successful businesses with a larger tax bill, the plan is to stiff the firefighters, the schoolteachers, and the people who collected garbage for 30 years.”

    Dean Baker

    “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”

    Winston Churchill

  6. Place your bets!!! Who is late posting the Lynx.
    Robby
    ENB
    Gillespie
    The new girl

    10 will get you 20, folks!

    1. The answer to “who is late” is always “Epi’s mom”.

    2. The new girl will take the hit!

    3. Awwwww! It was Ed. I would have paid 10-1.

  7. So it’s just like S.S and Medicare? Take from the young,give to the much richer old and hand out I.O.U. ‘s that are worthless?

    1. No, the funds contributed by the employers and employees – just accept it is all part of the payroll – are actually invested, and make money.
      SS and Medicare aren’t invested, just thrown into the rat-hole that is FEDGOV, hence the need to, Ponzi style, use current contributions to pay current benefits.

  8. Obviously the people who aren’t rich business men love paying higher taxes.

  9. Judging by the size of their pensions, New Jersey must have some of the best schools in the country! If you’re looking for yet another reason not to have Christie in the White House……..

    http://watchdog.org/200210/nj-…..ns-double/

    New Jersey’s $100K Club of retired public officials has more than doubled in the past four years, according to a New Jersey Watchdog analysis of state Treasury pension data.

    As 2014 ended, 1,988 retirees were collecting state pensions in excess of $100,000 a year ? the elite “1-percenters” among New Jersey’s 285,000 retirees.

    1. Their smarter and better,that’s why they were not in the private sector.

    2. I’m not defending Christie who is a giant turd. But I don’t know that that can be put on him. Those retirees were probably set up with that deal long before he was elected.

      I haven’t been paying enough attention to be sure, but I wonder if there was anything to the noise he made about pushing back on some public sector unions early on or if he was full of shit there too.

      1. But I don’t know that that can be put on him.

        Agreed. But I haven’t heard anything about him trying to fix the problem either. The next president shouldn’t be someone who repeatedly blames his predecessors.

        1. Presidents get a sweet deal after leaving office,.

          1. If you want to talk about pensions, try taking a look at what all politicians get for only a few terms in office.
            Now there’s a scandal.
            At least rank-and-file public employees have to put their time in.

      2. He could have made a issue of it and demanded action. He’s a bully when he wants to be. He may have a government pension himself.

    3. The easy fix is to delay benefits until actual retirement age…like say 65-67?

  10. Many people don’t understand that ‘Robin Hood’ stole from the government and gave to the people.He fought high,unjust taxes.

    1. Indeed, for this story I can’t help but think of the Monty Python song about Dennis More: “he steals from the poor and gives to the rich, stupid bitch”

  11. Re Pensions, “Blue Bloods” featured a cop contemplating retirement whining to the Commissioner that his pension was so inadequate after 22 years, that he “had to look for security work.” Cry me a river: according to NYPD website, a cop retiring after 20 years, gets a 50%
    pension. So a cop can be under 50 years old and retire at 50% pay and still work at another job for 15+ years. How horrifying! Of course, “Commissioner Reagan” promised to talk to the Mayor about improving the pension.

    1. Why do you hate our hero’s?

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  13. http://m.youtube.com/watch?v=KbtVaTWs6II

    The first thing that popped into my simple head.

    1. http://m.youtube.com/watch?v=kp-R1o753pM

      Damn it! Wrong video. Here it is.

  14. There are a couple of things that are glossed over in this article, and others similarly on Reason, when discussing pension funds. The major issue I have with reducing pensions is that doing so is tantamount to employment fraud. What if you signed an employment contract and accepted a job that paid $1000 per week, but in December included a lump sum $5000 payment? Then, when December came, your employer decided that they would refuse to honor the terms of your employment, and would renege on the lump sum payment? Or alternatively, reduce it to $1500? Doing so would be highly illegal in the private sector. Renaming the contractual structure a “pension” does nothing as far as changing the the inherent illegality, as well as the immorality of the behavior.

    1. Certainly you would have no objection to the employer paying but saying, “from now on, the bonus, pension, whatever, is going to be subject to circumstances.” My understanding is that public employees want no reduction in how their future pension is accumulated.

    2. If A promises B a certain sum of money for retirement and both A and B know that the source of the money is A hiring B to steal it from C, B can not thereby be heard to complain that A illegally reneged on his promise.

      1. Yes, and C, being an injured party, should have judicial recourse.

      2. Nice analogy, though completely inaccurate. Try this:
        A promises B a certain sum of money for retirement. Both are expected to pay a share of what would be needed to make it happen. B has theirs directly taken from their check. Later A comes back and says “I didn’t make my share of the payments I was supposed to, so you aren’t going to get what I had promised”.
        B should take the hit?

    3. think of it as a regulation. the government has no problem issuing regulations that affect my rate of pay and pension and work load that I did not sign up for when I entered my field. so fuck the gander. and who could be against common sense regulation?

    4. Company goes bankrupt, corporation owed the person money, no money, no debtors prison, person who owned company says oh well and moves on. Sucks to the person that agreed to such a silly promise.

    5. And if a city borrows money via municipal bonds and defaults on them, that is equally fraud as well.

      I see on reason why the pension creditors are owed in more special treatment in bankruptcy succession than any other creditor is.

      1. If municipal bonds pay a set rate of return, then you are correct. If the rate of return is based on some, fluctuating, market value, you are wrong.
        Pension creditors have a contract, most others don’t.

    6. How much (vs what they were promised) have the people who were swindled by Bernie Madoff been able to recoup? If there isn’t enough money to pay the pensions, it doesn’t matter what was promised. This isn’t unique to the government.

      Furthermore, when the money does run out, if the govt prioritizes pensioners over lenders, then its bond rates will skyrocket. Inflation is not a real solution here, either. Taking real value from productive people to meet pension obligations for retired people is a surefire way to kill an economy (see: Greece)

      The only real solution is to pre-fund any pension. When that starts killing your bottom line (see: USPS), then you know you’ve over-promised and can’t possibly deliver.

  15. The thing is, if you work or the State (or anybody, but the State is what concerns us here) and you encourage it to lie and steal in your favor, you have no grounds for complaint if it turns around and steals from YOU. Congratulations, State workers, you accepted contracts that ethical people would have refused, because there was no way they were going to be carried out. At a minimum you failed to do due diligence. The ride on the Gravy Train is coming to an end. Get. Used. To. It.

    1. this. those promises (lies) went unfunded by democratically elected representatives, so democracy. you should have chosen wisely.

    2. Have you, EVER, told an employer, who has offered you a raise or increase in benefits – “oh, no, that would cost you too much”?
      Where is that link to crickets, again?

  16. wealthy retirees better hope these younger folks have more compassion for them than the retirees have had for the rest of us.

    This seems appropriate here.

  17. I am making a good salary from home $5500-$7000/week , which is amazing, under a year ago I was jobless in a horrible economy. I thank God every day I was blessed with these instructions and now it’s my duty to pay it forward and share it with Everyone,
    Here is I started,,,,,,
    ?????? ?????? ?????? http://www.netpay20.com

  18. There are few things left out. These defined benefits systems were built for the very low working class government employees because the lower pay class employees don’t remotely make what their private counterparts do. Try working for 25 years making much less than what you could in the private world, its just not going to happen. So to attract someone to do this, they back-end loaded them with generous benefits. Unfortunately this plays well with the government employees who do get to the top levels like Directors because they too are underpaid compared to outside workers, but still earn a very decent wage. So that is the group this article is referring to, most definitely not those who are at the lower end of the pay range which is about 70% of all Government employees.

    The second thing that is looked over is that if you are in a defined benefit system with the government, you will not in general be eligible for Social Security, only Medicare. Those who do earn enough credits (40 quarters of substantial earnings outside of their government employment) will subject to the Windfall Profits Eliminations so you could pay into Social Security, but you will probably only receive about 30% of your what you would have if you were never employed by the Government in a defined benefit system.

    1. This is now, not then. Public sector workers at all levels are better compensated than their private sector counterparts today.

      If they want this level of retirement they should be contributing at least 25% of their pay and we all know that ain’t happening.

    2. ec462|2.18.15 @ 1:58PM|#
      …”These defined benefits systems were built for the very low working class government employees because the lower pay class employees don’t remotely make what their private counterparts do.”
      Bullshit. Ever hear of minimum wage?

      “Try working for 25 years making much less than what you could in the private world, its just not going to happen.”
      Try not lying.

      “So that is the group this article is referring to, most definitely not those who are at the lower end of the pay range which is about 70% of all Government employees.”
      Cite missing.

      “The second thing that is looked over is that if you are in a defined benefit system with the government, you will not in general be eligible for Social Security, only Medicare.”
      So what?

      ” but you will probably only receive about 30% of your what you would have if you were never employed by the Government in a defined benefit system.”
      Along with the 100% you get from working for the gov’t?

      I think you need to provide *believable* cites for all of this stuff; what might be true sounds like special pleading.

    3. Eh, not really.

      There used to be more and bigger private pensions, too.

      The reason that’s gone largely bye-bye is because it’s essentially a scam, and I say, good riddance.

      One of the most painful things for me to watch was a family member with a great “private” pension watch is former employer go bankrupt and wipe out the rest of his pension in restructuring. The government stepped in to “guarantee” his pension with pennies on the dollar. He never saved or invested, since he assumed his company would be there (aren’t corporations so big and strong?) It was too late for him to give his life to another company, or to go back and save more.

      Pensions are a way that employers can make promises to employees now, at the expense of future employers and employees. The only way the government gets away with it is taxes. So, they never have to change.

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