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You are correct, the current economy is helping vastly underfunded public state pensions trend in the right direction, but who knows how long that will last? If the economy keeps up, then perhaps some of these state pension funds in trouble can get back in the black , as long as politicians dont do anything stupid in the interim (not holding my breath on that one).
The link I posted you refer to as a "horror story", although somewhat dated, was simply a reference to California specifically, in a very well written article, on how they got to their current predicament. Synopsis=via the stupidity of politicians.
I have concern over California's pension predicament personally (and it's longer term viability), due to having retired in laws in that state that really rely on it.
I follow the California Pension story fairly closely as it is perhaps the best pigeon in a coal mine. When I referenced posting another updated link that could be out dated in two years it was about California. I had just read it prior to posting my response to you. It follows:
If you note the trendline a article in 2013 based on the previous few years of returns would paint a negative picture while one based on the most recent data show a uptrend on returns. Again who knows the future. It is interesting if you dig into how the investment money is used the reported data says it results in billions to the California economy including bond fund and provides over 90,000 jobs.
You are correct, the current economy is helping vastly underfunded public state pensions trend in the right direction, but who knows how long that will last? If the economy keeps up, then perhaps some of these state pension funds in trouble can get back in the black , as long as politicians dont do anything stupid in the interim (not holding my breath on that one).
The link I posted you refer to as a "horror story", although somewhat dated, was simply a reference to California specifically, in a very well written article, on how they got to their current predicament. Synopsis=via the stupidity of politicians.
I have concern over California's pension predicament personally (and it's longer term viability), due to having retired in laws in that state that really rely on it.
Quote:
Originally Posted by Mightyqueen801
Pension is based on the average of the highest consecutive three years' salary, usually the last three (Final Average Salary or "FAS"). There are exceptions. If the person got a salary bump over a certain percentage in the last three years, they can go back five.
So, it's 2% of the FAS for the first 30 years, 1.5% for each year after 30. I worked 37 years.
Another factor in public sector salaries is that there are years when the salary is stagnant because the politicians will declare a salary freeze and cut benefits in order to show that they are cracking down on the greedy public employees. They know that the voters will fall for this tactic. So, for example, from 2010 to 2015, we had no raises and our vacation time was cut for political purposes. In the end that affects the pension, too.
Quote:
Originally Posted by Larry Caldwell
Oregon's PERS problem happened because the state was supposed to match the employee contributions to their pension plan. For decades, employees dutifully contributed 6% of their gross pay to their pension accounts, while the state contributed nothing. Now the bill is coming due, and the state is crying big crocodile tears because they don't have the money. They had it 30 years ago, but spent it on other stuff. They tried to cut benefits, but the state supreme court said, "Nope. A deal is a deal. Pay up."
In an earlier post, I've already noted my wife is a retiring public employee. The process should be completed by November 1st. In addition, most of my immediate family worked for a state or federal government agency and retired.
However, I work for myself.
My position gives me a unique perspective on public employee benefits and retirement. I do very well understand the idea public employees sacrifice some income in return for higher benefits. This was definitely true in the case of my father--even with the large pension he ultimately retired on. It was true in the case of my sister who retired as a college professor from a state run university in the Midwest. It also true for my wife who is retiring as a nurse from a local government agency.
What many public employees fail to understand though is the day to day financial struggle that many of the taxpayers who support them go through. It is unnecessary to repeat the reality that pensions have disappeared completely in the private sector. Add to that, the poor quality health insurance plans most private sector workers have to utilize. The comment "why didn't they get a job with government?" doesn't work because everyone can't work for the government. There are a limited number of jobs and opportunities. Plus, its a good thing. If everyone worked for government no one would be left to pay taxes.
Now, add to that the fact that the tax structure that supports public employees in many states is a highly regressive one. Local government largely depends on sales tax and property tax for revenue. Some states have an income tax and some do not. Those with an income tax often have a flat rate that is levied against both low income earners and high income earners. My daughter escapes paying federal income tax because of her low-wage, part time job. She still falls within an income category that requires her to pay state income tax.
It shouldn't come as much of a surprise that many, particularly younger taxpayers, balk at having to pay taxes for public pensions and benefits. In fact, its very unrealistic not to expect this group might literally be enraged by what they see.
All of you former government employees who are honest will have to admit there is substantial waste and overlap in government. My wife saw it. My father saw it. Attempts to do anything about it often create more problems for an employee than they solve.
Courts can rule that states have to abide by earlier agreements to fund pensions. Ultimately, though the taxpayers may have the final word. They can move away. They can vote with their feet and move to a place with lower tax rates. I think Detroit might be a good example of that.
Frankly, the benefit packages for some retirements are probably too high. I suspect the price will probably end up being paid by future government employees who will receive lower benefit packages.
^^^^^^ Lots of states have implemented reforms and new hires are paying the price. One area of reform that the courts will allow revolves around COLA and that is and has changed in many places with caps and in some cases COLA only being paid if investment goals are met. As I noted earlier the impact in some places is showing up in recruitment and retention going down.
Let's not forget job security. Governments seldom run out of work or slash job according to the latest management fad.
You don't know government then.
I've worked in government about 27 years - experienced at least 3 RIFs (Reduction in Force) aka layoffs.
Because we are subjected to the whims of whatever powerhungry money slashers are in office.
Not only that - but if your boss - the top executive does not win re-election? The new executive makes their own appointments - I know people in my position who have moved jobs 3-4 times in the last 20 years because the new mayor wanted their own pick.
Frankly, the benefit packages for some retirements are probably too high. I suspect the price will probably end up being paid by future government employees who will receive lower benefit packages.
Yes, Oregon closed its PERS system in 2004, and canceled employer contributions. Now it's a mandatory 6% contribution from the employee that goes into a personal account. When you retire you can either take the money in cash, or convert it to an annuity. I retired in 2013, and rolled the account into my 457, where I have personal control over the investments. The state's financial distress will diminish over time, as those of us with a PERS pension gradually die off.
There's a lot of static about some football coach getting a $600k/year pension, but nobody seems upset about paying football coaches $3 million a year. It's all what you want to pay for, I guess.
All of you former government employees who are honest will have to admit there is substantial waste and overlap in government. My wife saw it. My father saw it. Attempts to do anything about it often create more problems for an employee than they solve.
I'm a little surprised that you say that. The city I worked for is still using the same City Hall it built in 1963, and it's not crowded. The huge productivity boost that the information revolution gave American workers allowed government to provide enhanced services to the citizens for much less money, and with fewer employees. Since 1963 the population of the town has tripled with no additional administrative staff, though the police and fire departments have expanded to meet demand.
The county courthouse is even older, though the state adopted a building code in 1973 and land use planning in 1984, so they built a small addition to accommodate the new building and planning departments. Everybody else is using the office space they used in 1952.
Yes, Oregon closed its PERS system in 2004, and canceled employer contributions. Now it's a mandatory 6% contribution from the employee that goes into a personal account. When you retire you can either take the money in cash, or convert it to an annuity. I retired in 2013, and rolled the account into my 457, where I have personal control over the investments. The state's financial distress will diminish over time, as those of us with a PERS pension gradually die off.
There's a lot of static about some football coach getting a $600k/year pension, but nobody seems upset about paying football coaches $3 million a year. It's all what you want to pay for, I guess.
Ummmm, I have to take great umbrage with your post and find it totally shocking especially since it came from such a well thought of poster like you. Are you actually saying that pension reform has created a reform that takes into account the fact that people die? How callous! Are you suggesting they are using actuarial tables and realize that when we retiree then die off they will see improvement.
NOOOOO Noooooo noooo. Imortality is the guideline. TY
The employees in the tiers behind me will not have the same pension setup I do. For example, I could retire at 55 if I had 30 years (I retired at 57 with 37). The younger ones cannot begin to draw benefits until they are 62.
As for waste, that is always a danger. The public transportation authority for which I worked had 10K employees when I started. It now has about 7K. Some of that is due to technology, some due to the way the authority does business and manages its resources. A lot of work has been contracted out to the private sector. The demand for more transparency in the management of public money has been helpful.
Of course we understand the day-to-day financial struggle some people have. Why wouldn't we? I have struggled financially for much of my own life despite a public sector job. I was not able to purchase a home of my own until I was 52 years old, and unless I live past 82, I will likely never see it paid off.
But these young taxpayers who are going to be enraged have to understand that they are paying for the bridges they drive over, the airports they fly out of, the water systems they drink from, and so forth, long after the people who put this all together for them are dead and no longer drawing pensions. I have no guilt about my pension. I saved the public far more than I will ever collect.
The employees in the tiers behind me will not have the same pension setup I do. For example, I could retire at 55 if I had 30 years (I retired at 57 with 37). The younger ones cannot begin to draw benefits until they are 62.
As for waste, that is always a danger. The public transportation authority for which I worked had 10K employees when I started. It now has about 7K. Some of that is due to technology, some due to the way the authority does business and manages its resources. A lot of work has been contracted out to the private sector. The demand for more transparency in the management of public money has been helpful.
Of course we understand the day-to-day financial struggle some people have. Why wouldn't we? I have struggled financially for much of my own life despite a public sector job. I was not able to purchase a home of my own until I was 52 years old, and unless I live past 82, I will likely never see it paid off.
But these young taxpayers who are going to be enraged have to understand that they are paying for the bridges they drive over, the airports they fly out of, the water systems they drink from, and so forth, long after the people who put this all together for them are dead and no longer drawing pensions. I have no guilt about my pension. I saved the public far more than I will ever collect.
I understand the need for pensions and I can understand the public sector hanging onto them even if they don't exist in the private sector. However, I've always felt that someone who joined an organization at age 20 shouldn't be able to retire at age 50. If the average person lives to be age 80 than that means they are receiving a pension for as many years as they actually worked. It seems like a huge windfall for the right person. I'm glad the minimum age has been increased to 62.
I am sure there are many reasons for reducing the transit authority's work force. However, one that is often overlooked by employees is that the high benefit costs work against the idea of a large work force. The pressure to adopt labor saving measures and technologies becomes greater as pension and health insurance obligations mount for an organization. I suspect there would be less pressure with a lower benefit structure. Its a trade off. No one wants to work in an organization with low salaries and benefits and over time that attracts lower caliber employees. However, too great a benefit structure leads to not replacing employees when they retire, etc.
Perhaps, you do understand the daily financial struggles of the average person well. However, I've talked to too many public employees that either do not or simply don't care. I often have to bite my lip talking to them in person. Their reality is a Cadillac health insurance plan and retirement by age 55. Also, they cannot simply be fired at the boss's will. Civil service or merit procedures have to be followed to terminate them. I do not necessarily say this is bad. However, its a different ball game than a private sector job and I would submit that merit or civil service protection has a dollar value to an employee, in and of itself, that justifies a slightly lower wage for public sector employees. Unemployment and layoffs are rare in the public sector. I have seen some very short furloughs for some groups, but they don't last long. Again, this freedom from most layoffs confers a value on government jobs that justifies a slightly lower pay scale.
You point out that public employees often perform functions that are invaluable in our society. Police, fire, the water works, and operating airports vitally affect the public interest. However, people who do construction work, operate the food industry, the stores, gas stations, and America's professional class (doctors, lawyers, engineers, architects) are no less important. I think there is a tendency to think whatever job we have is more important than other people. Its how we implicitly justify a high salary and/or benefits. Oh, I'm guilty of it myself. However, I think we should be all more carefully suggesting that our jobs are more important than others.
Than there are the public employees I've seen who clearly are paid more than they should be. The city I live in is a good example of that. Its not a large city and personally I wish it would consolidate with another city next door because the savings to tax payers would be great. I pay about $150 a month to have sewer service, culinary water, garbage service, police protection (low crime rate here), and fire protection. Its a bit much and if I go over to the city building I can always find the secretarial staff talking rather than doing actual work.
Yes, I do see why those who don't get to participate in this system are upset about paying for it.
I understand the need for pensions and I can understand the public sector hanging onto them even if they don't exist in the private sector. However, I've always felt that someone who joined an organization at age 20 shouldn't be able to retire at age 50. If the average person lives to be age 80 than that means they are receiving a pension for as many years as they actually worked. It seems like a huge windfall for the right person. I'm glad the minimum age has been increased to 62.
I am sure there are many reasons for reducing the transit authority's work force. However, one that is often overlooked by employees is that the high benefit costs work against the idea of a large work force. The pressure to adopt labor saving measures and technologies becomes greater as pension and health insurance obligations mount for an organization. I suspect there would be less pressure with a lower benefit structure. Its a trade off. No one wants to work in an organization with low salaries and benefits and over time that attracts lower caliber employees. However, too great a benefit structure leads to not replacing employees when they retire, etc.
Perhaps, you do understand the daily financial struggles of the average person well. However, I've talked to too many public employees that either do not or simply don't care. I often have to bite my lip talking to them in person. Their reality is a Cadillac health insurance plan and retirement by age 55. Also, they cannot simply be fired at the boss's will. Civil service or merit procedures have to be followed to terminate them. I do not necessarily say this is bad. However, its a different ball game than a private sector job and I would submit that merit or civil service protection has a dollar value to an employee, in and of itself, that justifies a slightly lower wage for public sector employees. Unemployment and layoffs are rare in the public sector. I have seen some very short furloughs for some groups, but they don't last long. Again, this freedom from most layoffs confers a value on government jobs that justifies a slightly lower pay scale.
You point out that public employees often perform functions that are invaluable in our society. Police, fire, the water works, and operating airports vitally affect the public interest. However, people who do construction work, operate the food industry, the stores, gas stations, and America's professional class (doctors, lawyers, engineers, architects) are no less important. I think there is a tendency to think whatever job we have is more important than other people. Its how we implicitly justify a high salary and/or benefits. Oh, I'm guilty of it myself. However, I think we should be all more carefully suggesting that our jobs are more important than others.
Than there are the public employees I've seen who clearly are paid more than they should be. The city I live in is a good example of that. Its not a large city and personally I wish it would consolidate with another city next door because the savings to tax payers would be great. I pay about $150 a month to have sewer service, culinary water, garbage service, police protection (low crime rate here), and fire protection. Its a bit much and if I go over to the city building I can always find the secretarial staff talking rather than doing actual work.
Yes, I do see why those who don't get to participate in this system are upset about paying for it.
It has never in my life been a thought of mine that my job was more important than anyone else's.
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