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Sure and agreed and I wonder who will get cut first and the most .
In California, it's always the local jurisdictions that get hit first. The State of CA has a way of taking away funds from local jurisdictions in hard times and never restoring them. Happens over and over like clockwork in CA.
The sole problem with NJ pensions was the State not making the contribution for over 20 years.
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.
Well, yes and no. Everything is relative. It used to be that our police, and firemen did not make decent salaries and these perks were in lieu of better salaries.
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.
Maybe things are different here in Colorado, but there are definite reasons why I need the pension to stay solvent.
1. We do not pay into Social Security, nor will we collect social security unless you have SS credit from other jobs. Any money collected from social security is deducted from the pension plan.
2. I pay 10% of my salary into the pension plan. The government contributes 10.15% plus a supplemental amount totaling an additional 7.3% of my salary. That 7.3% must come from money that would be used for employee raises. Needless to say, that leaves very little money for raises. In fact, my salary has not kept up with inflation for the past several years.
3. We get paid for sick days at retirement, but the formula is not as generous. The first 40 sick days accrued are deducted from the total. After that, the days are paid at a set rate that is lower than the employee's per diem rate.
I agree that pension reform is necessary, and that reform should start with retirement age. A person should not be able to start collecting his/her pension before age 60. The school district wouldn't like this though, as that would mean that teachers stay until they are 60 instead of retiring up to 7 years earlier. The district likes early retirement because they replace a high-salaried employee with a low-salaried employee and they pass off the obligation of paying the retiree to the state pension system.
The contributions to your pension fund equal 27.45% of your salary, according to the information you have given. At least your pension should be very well funded, it seems to me. In Calif. the percentages are lower: 8% (teacher), 8.15% (school district), and 2. something% (state of CA) for a total of approximately 18.5%. Those are the percentages the chief executive of the CA pension fund is talking about the legislature needing to raise.
As for the minimum age to start collecting a pension, it seems to me 55 is no problem provided that the pension amount is reduced correspondingly to be in sync with the greater number of years the retiree is likely to be drawing it. That is the case in CA, where the multiplier for retirement at 55 is only 1.4%, compared to the maximum possible multiplier of 2.4% at age 63 (or 61.5 with 30 or more years of service). That is a very substantial, but appropriate, hit, in my opinion. It allows people to retire early for whatever their reasons (burn-out, ill health, spouse has a good income, an inheritance has been received, etc.) without placing a burden on the pension fund.
It's very interesting to note the differences among the states. Thanks for posting.
Unused sick leave is treated similarly for federal retirees. For those hired into civil service prior to 1984, the multiplier percent was 2%. Many of my older engineering co-workers, who were highly paid, would use their annual leave in lieu of sick leave if sick or for doctor appointments. They wanted to keep all of their sick leave to add to their years of service to get the extra retirement pension. Some had as much as 1 1/2 years of leave when they retired and probably added $3-5K a year to their pension before COLA. Lower paid employees tended to use their leave.
For those hired since 1984, the multiplier percent is 1% (unless you are in law enforcement, air traffic controller, etc.). Initially you were not allowed to use sick leave for years of service and would just lose it once you retired. Starting in 2014, you can count 100% of sick leave counted towards retirement. I've used my leave, if needed, throughout the last 29 years so will just have about 10 months when I retire. Given the small 1% multiplier and the taxes on my pension, I would rather take the leave but don't consider it "professional" or ethical to abuse my sick leave.
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.
Besides most changes I have seen are only for new hires to avoid terms of employment suits. not every state or local has pension problem amounting to much if you watch senate hearings on state of the states.
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.
Yup, trying to convince folks to save days can be a challenge. Also when teachers use a sick day they get paid as does the sub who replaces them. The other side is that you are paying teachers upon retirement a current wage and not what the sick day was originally valued at when first accrued.
Exactly!!!!!
Lets say they start out at 35k and retire at 80k with 25 days left, they get paid the daily rate of 80k.
Retirement planning with pensions and benefits is another skill set that many miss. Example assuming that in addition to your pension you have a 403B/401k plan and you should. If you are maxed out wait until the end of the calendar to retire and pump it all in tax free for the upcoming year. It is the year you get paid not earned that counts. If retiring during the year and have cap room you can still put it all in etc etc.
Nice suggestion. Thats one of the "To Do's" on my list before i vamoose...I am pretty deversified with a pension, fidelity mutual Funds, co 401k, 2 AXA annuities, ultimately Social Security, Money Market accounts. Some of these are tax deferred some are not. I assume it makes the most sense to initially draw down on the non tax deferred first as i have already paid taxes on these and just have to pay tax on the Capital Gains.
Best to get professional advise but i think thats the best way..
Last edited by biscman; 02-24-2014 at 07:56 AM..
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