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When I retired eight and a half years ago, teachers' sick leave days (10 per school year) were indefinitely cumulative. Upon retirement, the number of unused days was divided by the number of work days in a school year (typically about 185 or 186) and that percentage of a year was added to the number of years worked in the formula. Note the possibility of having more than a year's worth of sick days accumulated after a long career. There was no check issued upon retirement for the unused sick days.
Let us assume a retiring teacher had fairly decent health and did not use the sick days willy-nilly. Let us further assume, for simplicity, exactly one year's worth. Also, we assume the maximum multiplier (2.4 percent which is achieved at age 63 or at age 61.5 with thirty or more years of service). Further, we assume a final salary of $60,000 which is fairly close to reality in the poorer paying districts here.
So: $60,000 times one (year) times .024 equals $1440, the amount of pension benefit added and which will be received by our hypothetical teacher every single year until death. Further, $1440 times 20 years equals $28,800. So if that teacher collects the pension for 20 years, he or she pockets $28,800 for the sick days. If he or she dies one year after retirement, the amount is $1440. So it's a roll of the dice for both the teachers and for the system.
I understand that sick leave is no longer indefinitely cumulative - I'll have to check on that and get back here.
I was in pretty good health during my 34-year career and was also conscientious; I took very few sick days and had well over one year's worth upon retirement. Based on conversations with colleagues, I am a very unusual case.
Good info. This was in California, right?
I think if you were a teacher in NJ and you worked for a good 30 year run your ending salary would be $20k higher. does the same formula work here in the Garden State. Teachers in NJ are paid very well compared to NC where i lived for 20 years before moving back here in 2006.
Well at least your friends are still in New Jersey - and haven't moved to Florida (which many have). So they're at least taxpayers in the state that's paying their "retirement freight". Robyn
For now Robyn, but went out with 4 of these couples and guess what was the discussion? They're all moving to NC and SC after they put their houses on the market this spring. $12k in Real Estate taxes the driving factor as well as 57 inches of snow down the Jersey shore this winter. Another one coming this Tuesday night.
biscman- you keep on writing about cops but I am posting about teachers. Teachers do not receive what cops receive and that is my point. You have a failure to comprehend facts. Name one teacher that cashed in a huge sick leave payout. Not an administrator or a super. A teacher.
By the way the cops pension even with early out and double dipping is funded adequately. You prove my point that the pension problem for teachers is not their benefit but the States failure to contribute.
The answer to why you did not follow your father is you thought the private sector was a better choice. Now you think you were wrong.
Thomas, oh contrare... My points were more directed at all civil Servants who work for Govt. Municipal, state, or Federal. I was trying to express the feelings of most people i associate with who are in the Business world versus Government employment.
I am pretty good at comprehending facts and i will be a good boy and not get into a debate with you on the deal you Teachers have. Summers off, Christmas Breaks off, Easter weeks off, Teacher day conferences, snow days off, etc..... I am no begrudging teachers for this but please don't try to act like a martyr.
I'm 60 years old in 3 weeks, i don't associate with many teachers. Most of the wives of my friends are asst. principals or principals.
why didn't i follow my fathers footsteps back in 1976 after college? He wouldn't let me. Ha..... He said if he and my mother were going to work their asses off helping to pay college tuition they wanted me in the Business world like my uncles.
I regret it now 38 years later because i would love a $70k pension i could have drawn 11 years ago when i was 48. If you understand finance and numbers tell me how much you think the average person has to have saved to have a $70-80k year guaranteed income and health benefits, including spouse, for both of your lives??
I will mark your score after you come up with your number.
It was definitely part of mine.
I was not a teacher or admin - I worked in the business office.
I knew from day one that unused sick leave could be converted to service credit. In my district's contract, SL was indefinitely cumulative, vacation was capped after a certain amount was saved. And we're offered a choice of cashing out or service credit. I wasn't one to call in sick - I wanted that service credit!
Right. It's the same story in CA. The thing is, it used to be true that public sector folks made less than private sector folks. But today, for the most part, it isn't true any more. Both pay and benefits have gone UP for public sector folks over the last 20 years, but public sector folks are still 20 or 30 years behind the times, acting as if their salaries are low compared to their private sector peers.
I work in the public sector myself and I see the above mentality. People just take what they have for granted and then they want more. It's the way our brains are wired, unfortunately. And anyone who tries to keep expectations in check is the bad guy.
If the state wasn't making payments to the pension for over 20 years, why the heck weren't the unions who pushed for them doing something about it? They didn't give a shyt until the shyt hit the fan. Then they made the governor the bad guy.
Some years ago, the union took the state to court over the non-payments. The courts ruled the state of NJ did not have to pay. When then Gov. Whitman "borrowed" money from the pension fund, she was also taken to court. Gov. Christie has made some pension reforms, but will not make the full amount that should be paid for 7 years (the first year a 1/7 amount will be paid, second year 2/7, etc.). While that is certainly better than paying nothing, it falls far short of the needed amount.
The union really can't do much of anything to control what the state pays. NJ has not really bounced back very well from the recession, and revenues are short of projections. There is concern that borrowing costs will be higher if the state gets a lower credit rating, thus worsening the problem.
Hopefully others will agree that the following question is ok to raise in this thread. I think so.
Should a younger person knowing they will retire with a pension in there 403/401 workplace savings account even consider annuities? You already have a solid income stream why not build up a nest egg of equities and bonds instead? I think this is relevant because part of pension reform has been to minimize the defined benefits part and to establish partial defined contribution to go along with it. This of course assumes decent choices.
Very good point tuborgP. A pension is bacically a annuity only better. with a annuity you have to determing which funds you invest your lump sum annuity contribution. a lot of people are not good at picking investments, even with a annuity.
A pension on the other hand is GUARANTEED!!!!!!
If a Govt Pension you even get a COLA..
I draw a pension from my last job where i worked 30 years and at age 55 i started drawing it to invest as we do not get COLA'S. What you get at 55 youw will get untill you jump in the pine box...
Thanks for posting about federal retirement, which I've always understood very poorly. That 1% multiplier seems shockingly low. Is it that low because federal employees subject to that multiplier were also put under Social Security? That way they have the (low) federal pension plus the (low) SS which together (hopefully) make a livable pension? Please clarify, as I want to understand this better.
The 1% multiplier was due to employees being placed under Social Security with the conversion of the retirement system. However, the old system required employees to pay in 7%, with a matching contribution from the government into the system. As I understand it, employees hired prior to 2013 pay in 0.8% into the pension system, those hired in 2013 pay in 3.1% and those hired in 2014 pay in 4.4%:
The agreement would create a three-tier system for employee contributions to their civil service pensions. Those hired before this year pay 0.8 percent of their salary, those hired in 2013 pay 3.1 percent and those hired after Jan. 1 would pay 4.4 percent under the budget agreement.
Also, the 1% per year benefit applies to folks retiring before age 62, those with at least 20 years of federal service time and at least 62 years old at the time of retirement get a 10% kicker, making the pension computation 1.1% per year.
Computation of FERS Component - Age/Formula
Under Age 62 at Separation for Retirement, OR–
Age 62 or Older With Less Than 20 Years of Service - 1 percent of your high-3 average salary for each year of service
Age 62 or Older at Separation With 20 or More Years of Service - 1.1 percent of your high-3 average salary for each year of service
Some years ago, the union took the state to court over the non-payments. The courts ruled the state of NJ did not have to pay. When then Gov. Whitman "borrowed" money from the pension fund, she was also taken to court. Gov. Christie has made some pension reforms, but will not make the full amount that should be paid for 7 years (the first year a 1/7 amount will be paid, second year 2/7, etc.). While that is certainly better than paying nothing, it falls far short of the needed amount.
The union really can't do much of anything to control what the state pays. NJ has not really bounced back very well from the recession, and revenues are short of projections. There is concern that borrowing costs will be higher if the state gets a lower credit rating, thus worsening the problem.
Very true Fay, sad state of affairs for NJ over the next decade. It gets to a point how much higher can they raise taxes to make up this shortfall. Very sad.... I do know one thing, if we get another Democrat governor, we will see a tax increase.... As per Sweeney!!!!
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