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I think the point was that everyone else just receives SS and 401k type plans. I don't think anyone is arguing that govt employees should not get social security.
I understand that not all government employees receive defined benefit plans. Some of them do have a similar retirement plan to a 401k, and no-one here has a problem with this. You put a certain amount into your account, and you take whatever is left plus social security when you retire. If you want a high rate of return, you go for risky investments and take responsibility for that risk. If you don't want to take responsibility for risk, you put everything into fixed income and accept a lower rate of return.
What we're griping is completely different -- we're talking about the defined benefit plan, which is nothing like a 401k. The big difference between a defined benefit plan and a 401k is that the defined benefit plan promises a certain amount regardless of the growth of the fund or of the employees investments. Implicit in this promise is also the promise of a certain rate of return. And that's where the problem lies -- the promised risk free rate of return (about 8% at the moment) always greatly exceeds the risk free rate of return available in the market. So to achieve those promised returns, the pension needs to invest in risky investments. Hence the question is, who takes on that risk if not the beneficiary ? Inevitably, it's the tax payer.
Good post.
But seriously, I thought teachers didn't contribute to Soc Sec because they were contributing to their own pensions instead? Then why are we subsidizing their pensions?
But seriously, I thought teachers didn't contribute to Soc Sec because they were contributing to their own pensions instead? Then why are we subsidizing their pensions?
I guess this is the issue you are talking about.
I'm pretty sure everyone pays payroll and social security tax. I think it would be difficult to exclude a citizen from those benefits (they don't just cover pension)
As for their pensions, social security is a safety net, it's not much of a retirement plan.
Officially, we're not really "subsidizing" their pensions because they contribute to the state pension fund (about 5% or so of their salary). Unofficially, the pension needs an 8% return to be well funded, and they need to find a way to top it up if the stock market tanks -- so the real subsidy here is that the tax payer is taking on the downside risk of the pension fund investments.
I'm pretty sure everyone pays payroll and social security tax. I think it would be difficult to exclude a citizen from those benefits (they don't just cover pension)
As for their pensions, social security is a safety net, it's not much of a retirement plan.
Officially, we're not really "subsidizing" their pensions because they contribute to the state pension fund (about 5% or so of their salary). Unofficially, the pension needs an 8% return to be well funded, and they need to find a way to top it up if the stock market tanks -- so the real subsidy here is that the tax payer is taking on the downside risk of the pension fund investments.
See, I thought their safety net was through their union stuff (pension for retirement, disability insurance like AFLAC, etc).
The taxpayers are subsidizing their pensions if they aren't paying enough in as you said.
And they pay into BOTH systems. Nice, big, hefty chunks of each paycheck.
I'm not sure what your point is... we ALL pay into both (well, those worried about retiring)... we in the private sector pay into Social Security AND pay into our 401(K) but guess what? We don't get a gauranteed return on our 401(K)! Maybe we win, maybe we lose, the risk is ours... the problem is, with those damn unions, their risk is ours too!
For many years, employees of some federal agencies did not pay into Social Security.
Teachers are not Federal employees.
My father, for example, retired last year from DoD and will never collect SS. Also, by the way, as someone who lost his job last year, I have to tell you most government jobs actually pay MORE than similar private sector jobs these days.
As a former municipal employee in NJ with 32 years behind me, I can tell you this is NOT universally the case.
Before I wound up starting my own business, I did a lot of research and found government jobs to be very well-paying, especially on the federal and state levels.
Look at what they pay non-uniformed municipal employees -- you'll change your tune.
Fortunately, the business I started has been doing pretty well and has been growing, but if it ever doesn't work, government would be the first place I'd look for employment.
It looks rosy -- but when you deal with taxpayers on a daily basis, it's not the fun and games you think it is. Oh, there are some nice people, but the majority treat you like dirt. I've been cursed at, threatened, and called more names than I can remember -- and these were people I was trying to help.
But seriously, I thought teachers didn't contribute to Soc Sec because they were contributing to their own pensions instead? Then why are we subsidizing their pensions?
They contribute to both.
Why do you pay road taxes? Why do childless and retired people continue to pay school taxes?
And before you go on and on about the people in the public sector (who are demonized and made to look like thieves), why do the presidents of large corporations get such huge compensation when the people who do the actual work get less and less?
I'm not sure what your point is... we ALL pay into both (well, those worried about retiring)... we in the private sector pay into Social Security AND pay into our 401(K) but guess what? We don't get a gauranteed return on our 401(K)!
Uh, neither do the public sector employees.
Maybe we win, maybe we lose, the risk is ours... the problem is, with those damn unions, their risk is ours too!
Ah, the damned unions -- the entities that were responsible for the 5-day workweek, paid holidays and vacations, paid sick time, paid jury-duty time -- yeah, they're always the bad guys.
Instead of blaming unionized workers for what the unions fought for, why not try to unionize your own workplace?
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