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Old 04-08-2008, 06:40 AM
 
269 posts, read 1,007,242 times
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Quote:
Originally Posted by PeaceAb View Post
Just curious where in that link did you find 88K per year for the K-teacher? Also, keep in mind this is not AVERAGE pay for a teacher. If a teacher would happen to make that much money they would have to have been in the field for 30+ years.

People don't seem to have any problem with the fact that actors get paid millions of dollars to simply endorse a product (smile in a commerial) but get upset when those men and women that educate the children of our future get paid the money they rightfully deserve. Their jobs are not easy.

You can choose Kindergarten and search the entire state. The point of this whole argument is teachers making over double what other teachers are making. It is easy to see why our taxes are so high, especially when you add the guaranteed pensions.

Actors make what they make because they are worth it. If an Adam Sandler will make $40 million per movie, then he can demand $20 million to be in it. Simple free market economics, which many people do not understand.

And nobody said a teachers job is not easy (except the 3 months off per year at the expense of our childrens future, those 3 months are easy) They should not be guaranteed a salary and obscene pension, oh dear, here we go again.
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Old 04-08-2008, 06:44 AM
 
269 posts, read 1,007,242 times
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Just counted 81 Kindergarten teachers making over $90K in Pennsylvania (from that website). I don't even want to continue to count the over $80K crew. A guaranteed pension for this type of salary would cost $2 million per teacher (at least) in the free market. Then you have to add in free lifetime health care.
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Old 04-08-2008, 06:49 AM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by right-here-i-say View Post
But the reality is teams with higher payrolls win more games, but I've had lawyers try to say the payrolls don't matter, because of a few teams here and there that go against the grain and win (and then have to unload all of their players)
Well, those people would be wrong, because there is a positive correlation between team payroll and team wins. See here for an analysis of 2007:

The Baseball Analysts: 2007 Payroll Efficiency

Of course it isn't a perfect correlation, and what that implies is that team payroll is not the only thing that determines team wins, But again, team payroll does indeed have at least some influence on team wins.
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Old 04-08-2008, 06:51 AM
 
269 posts, read 1,007,242 times
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Quote:
Originally Posted by BrianTH View Post
Well, those people would be wrong, because there is a positive correlation between team payroll and team wins. See here for an analysis of 2007:

The Baseball Analysts: 2007 Payroll Efficiency

Of course it isn't a perfect correlation, and what that implies is that team payroll is not the only thing that determines team wins, But again, team payroll does indeed have at least some influence on team wins.
Dude, you must be on this site 24-7! At least we agree on this one.
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Old 04-08-2008, 07:10 AM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by right-here-i-say View Post
Just counted 81 Kindergarten teachers making over $90K in Pennsylvania (from that website). I don't even want to continue to count the over $80K crew. A guaranteed pension for this type of salary would cost $2 million per teacher (at least) in the free market. Then you have to add in free lifetime health care.
The employers' contribution rate to the Pennsylvania Public School Employees' Retirement System (PSERS), calculated by the actuaries for full funding once the employee's contribution is included (for employees hired after July 1, 2001, the employee contribution rate is 7.5 percent), was 7.13 percent for 2007-08. See here:

About PSERS - Just the Facts (http://www.psers.state.pa.us/org/facts.htm - broken link)

So that roughly tells you how much more the employer contribution to the PSERS ends up being worth to the employee in salary terms (again, currently approximately 7.13 percent more). Of course that is a bit misleading, because economies of scale and risk-pooling allow a large pension program to provide these benefits at a considerably lower per person cost. So if the teachers had to self-fund the same personal benefits, they would actually have to be paid considerably more than just an additional 7.13 percent.

Last edited by BrianTH; 04-08-2008 at 07:24 AM.. Reason: Updated to 2007-08 funding numbers
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Old 04-08-2008, 09:49 AM
 
269 posts, read 1,007,242 times
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Quote:
Originally Posted by BrianTH View Post
The employers' contribution rate to the Pennsylvania Public School Employees' Retirement System (PSERS), calculated by the actuaries for full funding once the employee's contribution is included (for employees hired after July 1, 2001, the employee contribution rate is 7.5 percent), was 7.13 percent for 2007-08. See here:

About PSERS - Just the Facts (http://www.psers.state.pa.us/org/facts.htm - broken link)

So that roughly tells you how much more the employer contribution to the PSERS ends up being worth to the employee in salary terms (again, currently approximately 7.13 percent more). Of course that is a bit misleading, because economies of scale and risk-pooling allow a large pension program to provide these benefits at a considerably lower per person cost. So if the teachers had to self-fund the same personal benefits, they would actually have to be paid considerably more than just an additional 7.13 percent.
There you go again....

What would it cost for a GUARANTEED pension per person. To guarantee, you basically need to go with a guaranteed rate of return. In my example, $2 million of todays dollars with a guaranteed rate of 5% return would buy you $57K per year for 35 years (after that you get nothing)

The reason I used that example, is because I know of 3 ex teachers who all retired in their low 50's, and are getting $50K to $60K per year (plus free benefits).

So what happens to the pension fund if the teachers switch to a 401k or 403b? Would it be able to pay out everything that is promised?
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Old 04-08-2008, 10:57 AM
 
20,273 posts, read 32,877,652 times
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Originally Posted by right-here-i-say View Post
What would it cost for a GUARANTEED pension per person. To guarantee, you basically need to go with a guaranteed rate of return. In my example, $2 million of todays dollars with a guaranteed rate of 5% return would buy you $57K per year for 35 years (after that you get nothing)
Well, to get the answer to such a question I would go ask an actuary. That is why I linked the above information, because it tells you what funding rate the actuaries have calculated.

By the way, one of the problems with your approach to answering this question is that you are treating it as equivalent to a self-funded retirement plan, but of course a pension fund can benefit from all sorts of economies of scale and risk-pooling. The closest an individual can get to doing that is buying something like an immediate annuity from an insurance company at retirement, since the risk-pooling and economies of scale available to insurance companies also allow them to offer annuity yields considerably higher than what an isolated individual account could provide. But even in that case, the person buying the annuity also has to cover the additional costs associated with marketing the product and maintaining all the policies, plus the insurance company's profits.

Quote:
So what happens to the pension fund if the teachers switch to a 401k or 403b? Would it be able to pay out everything that is promised?
Well, it depends on how the pension fund is currently structured and funded, but often the employer will need to provide additional funds on a one-time basis to make the conversion.

By the way, employers today tend to prefer defined contribution plans (such as 401Ks) over defined benefit plans because defined contribution plans tend to cost less for the employer. But there is a looming crisis because many employees are failing to fund their defined contribution plans at a sufficient level--sufficient meaning at an adequate level to meet their expectations for retirement.

Of course part of the point of defined contribution plans is that employees get more flexibility to decide exactly what sort of retirement they want to fund. But to the extent many people are simply misinformed about what it will take to get the retirement they are expecting (which is what the studies show), this is going to end up causing a lot of unhappiness. Basically, a lot of people are either going to have to accept a lower quality of life than they were expecting, or work a lot more than they were hoping, because they will not have saved enough in their defined contribution plan.
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Old 04-10-2008, 09:37 AM
 
269 posts, read 1,007,242 times
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Although your answers are very thorough, I can accurately call the Pension fund a ponzie scheme. If nothing else goes into it, the money cannot be guaranteed (except from the Pennsylvania taxpayer)

You are correct, nobody can make somebody put money into a 401k or 403b. Unfortunately, people would rather have granite countertops now, instead of a good retirement later.
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Old 04-10-2008, 10:12 AM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by right-here-i-say View Post
Although your answers are very thorough, I can accurately call the Pension fund a ponzie scheme. If nothing else goes into it, the money cannot be guaranteed (except from the Pennsylvania taxpayer).
Well, no, not really. A true Ponzi scheme necessarily involves a fraud: investors are told the profit they are getting is coming from some sort of return on their investment, when in fact they are being paid directly from more recent investments.

A defined benefit pension program thus is not a Ponzi scheme, because no one is being lied to about where their pension benefits come from. Indeed, all the detail you might want about the financial structure of the PSERS is available to the public.

Moreover, to the extent a defined benefit pension program is not fully-funded, it basically is just a deferred compensation program. In other words, there is nothing fundamentally different about being paid a salary now out of your employer's revenues, as opposed to being paid a pension later out of your employer's revenues, except for the separation in time between when you worked and when you get the compensation for your work.
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Old 04-10-2008, 02:31 PM
 
269 posts, read 1,007,242 times
Reputation: 61
Quote:
Originally Posted by BrianTH View Post
Well, no, not really. A true Ponzi scheme necessarily involves a fraud: investors are told the profit they are getting is coming from some sort of return on their investment, when in fact they are being paid directly from more recent investments.

A defined benefit pension program thus is not a Ponzi scheme, because no one is being lied to about where their pension benefits come from. Indeed, all the detail you might want about the financial structure of the PSERS is available to the public.

Moreover, to the extent a defined benefit pension program is not fully-funded, it basically is just a deferred compensation program. In other words, there is nothing fundamentally different about being paid a salary now out of your employer's revenues, as opposed to being paid a pension later out of your employer's revenues, except for the separation in time between when you worked and when you get the compensation for your work.
Very nice wording, but if they started doing 403bs, it wouldn't be funded. Call it what you want. Because your money is going towards other people's pensions in hopes someone elses money will go to yours some day, I call it a Ponzie scheme. Now, if what each individual teacher paid am account which gained interest and then paid out at retirement each year what was that account earned, this would not be a ponzie scheme.
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