hopefully, depends on my pension

[hopefullyoneday]

Quote:

Originally Posted by pb4uski I suspect what the Chamber may have been reacting to was a benefit formula that was much more rich/liberal than typical. Even for long term employees, pensions generally do not totally (100%) replace earnings... in part because of social security.... remember the 3-legged stool (pension, SS and personal savings) If your plan pays 100% of pay then that is a red flag that the plan is too rich... and may be why the plan is struggling financially. IIRC for long-term employees 2/3rds was the previous gold standard. Also, there should be no need for anyone to retire with 100% of working wages since social security and medicare taxes take 7.65% out and you don't pay that on retirement income... the point being that if someone retired and their pension was 92.35% of their working gross then their take-home pay would be no different from working and they would get SS on top of that. Pensions are usually designed to replace pay... not provide a raise. One thing that you need to consider before judging them is what their asset allocation is compared to yours.... I'd bet that it is likely that your 457b has a higher allocation to stock than your pension fund does.

Our stool only has 2 legs because we do not pay into SS nor do we get SS
(even though I did pay for 15 years before I became a FF and will never see a dime of it)



Their allocations were mostly stocks but when the market took a dump they went conservative. A fellow ff who is a financial advisor showed that if they rode the storm out without selling off we would be much further along to being in the black.

[pb4uski]

Well if you don't pay into SS then I could see that the pension leg would be stronger to expect it to be 100% is unusual.

When was this market dump that they panicked and sold? From your prior post it sounded like the 8.75% was pretty recent and there hasn't been much of a market dump recently.

[hopefullyoneday]

Quote:

Originally Posted by Walt34 This may very well be the case. I'm a retired police officer and I went out a bit over 70% (I think 72%) and the max that one could get to was I think 73% or thereabouts. Anyway, when I retired my net monthly income actually went up a few dollars. We're talking single digits here so it wasn't significant. But the reason was as you said, I wasn't paying into SS, Medicare, union dues, the pension plan, and I was maxed out on the 457 contributions. I've heard of pension plans that promise to pay amounts like 100% and agree that's just crazy. BTW, not all pension plans are in trouble. As of a few months ago the one I'm in was 94% funded.

Ours is one of the ones that you COULD make 100% or more of your base pay.
Our formula used to be called a rule of 80. Which means you are able to retire when your age at retirement and years of service equals 80. For me that would be age 55 with 25 years of service 55 +25 = 80.
Then you take your years of service (25) and times that by the old multiplier of 3 which will give you your percentage of pay. 25 x 3 = 75%

Now here is where it gets out of control, BUT it is what we were promised. We have guys that work 30 plus years which will give them at least 90% (30 x3=90) but it is 90% of the highest 3 year average WITH overtime. So their base pay can be 75k but if they work allot of overtime it could be well over 100k
In MY case I wanted to do 25 years which would put me at 75% of my 100k 3 year average which would give me 75k at year pension. But the new rule is now instead of a 3 multiplier it is 2.5 so I went from 75% down to 62.5% and instead of counting my overtime it only counts base pay. So my pension went from 75k to $46,875 per year. AND they say a new lower multiplier is coming soon.

[hopefullyoneday]

Quote:

Originally Posted by pb4uski Well if you don't pay into SS then I could see that the pension leg would be stronger to expect it to be 100% is unusual. When was this market dump that they panicked and sold? From your prior post it sounded like the 8.75% was pretty recent and there hasn't been much of a market dump recently.

according to the email we got from the union about HOW DID WE GET HERE the ysold when the dotcom happened in 2000-2002 then got back in high just before the 2007 2009 recession. So they have been buying hi selling low, now just inv conservative since they cant ride out a downturn

[BeachOrCity]

Quote:

Originally Posted by hopefullyoneday Our pension also is not protected under any contract, the city can change it at any time.

So your union did not protect the pension? Sounds unusual.

If not protected by union contract then it is subject to erisa. They can freeze but not lower what you have accrued. Since most of the benefit accrues in later years you could get majorly screwed if the municipality is draconian with the new rules they introduce.

Bottom line is if they introduce new rules your person will be the higher of
1. Calculated under new rules as of the date of your retirement
Or
2. Old rules but only accrues to the date they change the rules. So for example you would not be eligible if you only have 20 years as of date of change to retire and receive pension until much later and it would be based on your current pay not your future pay. This is a big hit


You may have known all of this but i put it out here anyway. I would double check on your union not having a contract that stipulates the pension.

[38Chevy454]

If you worked 15 years under a job paying into SS, you should be qualified since you will have 40 quarters. Your SS may not be much, and it may be reduced by your city/state paid pension (I don't know the details, but others can provide better info on this), but you should be eligible for a small SS based on your 15 years.

It is good that you are working to be in good shape even with potential cuts to pension. That is the right thing for you to do.

[hopefullyoneday]

Quote:

Originally Posted by BeachOrCity So your union did not protect the pension? Sounds unusual. If not protected by union contract then it is subject to erisa. They can freeze but not lower what you have accrued. Since most of the benefit accrues in later years you could get majorly screwed if the municipality is draconian with the new rules they introduce. Bottom line is if they introduce new rules your person will be the higher of 1. Calculated under new rules as of the date of your retirement Or 2. Old rules but only accrues to the date they change the rules. So for example you would not be eligible if you only have 20 years as of date of change to retire and receive pension until much later and it would be based on your current pay not your future pay. This is a big hit You may have known all of this but i put it out here anyway. I would double check on your union not having a contract that stipulates the pension.

We had/have what they call collective bargaining. Our contract with the city expires every 4 years with a 1 year grace period. On our last contract 3 years ago last October that is when the city lowered our multiplier. They also removed the article containing the pension. We took them to court and we lost. The city told the union if you take us to court again we will lower the pension even more. So what did the union do they took it to the supreme court for failure of the city to bargain with good faith. The city set up a date before the court date to bargain but shot down all the proposals the union gave them including us firefighters to contribute more of our own money into the pension. The supreme court refused to hear the case since the city did sit down with us in "good Faith". So now the city is proposing additional cuts in the pension.

[hopefullyoneday]

Quote:

Originally Posted by 38Chevy454 If you worked 15 years under a job paying into SS, you should be qualified since you will have 40 quarters. Your SS may not be much, and it may be reduced by your city/state paid pension (I don't know the details, but others can provide better info on this), but you should be eligible for a small SS based on your 15 years. It is good that you are working to be in good shape even with potential cuts to pension. That is the right thing for you to do.

Yes, i do have enough credits but with a pension there is a formula called "the windfall". According to that formula i will still make too much in pension to get any money in SS. Which makes no sense to me because i have friends that have retired on 401k's making more than what my pension would be.

[Philliefan33]

Quote:

Originally Posted by hopefullyoneday Yes, i do have enough credits but with a pension there is a formula called "the windfall". According to that formula i will still make too much in pension to get any money in SS. Which makes no sense to me because i have friends that have retired on 401k's making more than what my pension would be.

You won’t lose all of your Social Security. It will be reduced to some extent, depending on how many years you paid into SS and the year you were born.

Go to the SS website and read up on the Windfall Elimination Provision.

[fidler4]

Quote:

It seems to be a political issue. What is bad is that our union has no power. We cant strike or demand anything. We can only accept what the city is doing to us.

Here’s my experience based on events in a different state: Yes its a political issue and was most likely a political issue back when the 100% pensions were given out to earlier firefighters when the union had more power and used that power to elect pro-union politicians who gave them their 100% pensions. But now the true reality of the costs of those lucrative pensions has hit home and the power has shifted away from the union to pension reform advocates and the politicians they have elected.

There is no short term solution. It’s going to take a combination of increase funding into the system as well as cuts from various sources. It’s going to be painful but it needs to happen.

[hopefullyoneday]

It seems to be a political issue. What is bad is that our union has no power. We cant strike or demand anything. We can only accept what the city is doing to us.[/QUOTE]


Here’s my experience based on events in a different state: Yes its a political issue and was most likely a political issue back when the 100% pensions were given out to earlier firefighters when the union had more power and used that power to elect pro-union politicians who gave them their 100% pensions. But now the true reality of the costs of those lucrative pensions has hit home and the power has shifted away from the union to pension reform advocates and the politicians they have elected.

There is no short term solution. It’s going to take a combination of increase funding into the system as well as cuts from various sources. It’s going to be painful but it needs to happen.[/QUOTE]

I agree, something needs to happen. But when i took the career of firefighter i was told i was a civil service employee and the benefits i have will never decrease from what they are when i hired on. Now the benefits are decreasing and i am too old to go work at another fire dept as you have to be younger than 36 years old. The city has a HUGE rain day fund from all the gas well money they have gotten over the years so they could easily get the fund back to funded status to keep the promises to the current employees. Then they can tell new hires what their pension will be so they can decide if they want to accept the career or not. I think the city should own up to what they promised.

[Teacher Terry]

When our state changed the multiplier for the pension it was only for new hires. Any changes they made did not affect people already working. We don't pay into SS either but will get a small reduced SS for when we worked and paid into it.

[Walt34]

Quote:

Originally Posted by Teacher Terry When our state changed the multiplier for the pension it was only for new hires. Any changes they made did not affect people already working.

That's what my former employer did - the pension plan I'm under ended in the mid-1980's and I'm "grandfathered in". The plan offered to new hires then required that they pay significantly more into the 457 plan but the cost of the pension plan while working went down significantly too. Of course the benefits went down too. This made the changes almost a wash IF the new hires had the self-discipline to heavily contribute to the 457 from day one. As we all know, few people do.

And for the then-current employees they dangled a carrot: You could change to the new pension plan and pay lower rates for the pension AND you could get back half of your previous pension contributions, tax-free of course since the taxes had already been paid. One red flag that was immediately obvious to me was that if you made the change it was irreversible; there was no going back. So I did not opt for the new plan and stayed in the old one.

A lot of guys took the bait and spent the money on bigger houses, new cars, boats, motorcycles, etc. Then of course they had to find secondary jobs when they retired. I've talked with a few of them after they retired and of course they are very, very sorry that the took the bait. Most are still working and will be as long as they are physically able.

[hopefullyoneday]

Quote:

Originally Posted by Teacher Terry When our state changed the multiplier for the pension it was only for new hires. Any changes they made did not affect people already working. We don't pay into SS either but will get a small reduced SS for when we worked and paid into it.

The city was just going to do new hires as well but the union shot that down and said we are unified. So the city did it to all of us.

[hopefullyoneday]

Quote:

Originally Posted by Walt34 That's what my former employer did - the pension plan I'm under ended in the mid-1980's and I'm "grandfathered in". The plan offered to new hires then required that they pay significantly more into the 457 plan but the cost of the pension plan while working went down significantly too. Of course the benefits went down too. This made the changes almost a wash IF the new hires had the self-discipline to heavily contribute to the 457 from day one. As we all know, few people do. And for the then-current employees they dangled a carrot: You could change to the new pension plan and pay lower rates for the pension AND you could get back half of your previous pension contributions, tax-free of course since the taxes had already been paid. One red flag that was immediately obvious to me was that if you made the change it was irreversible; there was no going back. So I did not opt for the new plan and stayed in the old one. A lot of guys took the bait and spent the money on bigger houses, new cars, boats, motorcycles, etc. Then of course they had to find secondary jobs when they retired. I've talked with a few of them after they retired and of course they are very, very sorry that the took the bait. Most are still working and will be as long as they are physically able.

We had the opportunity to invest in a 457 when I hired on as well. But I was told the current pension formula was a guarantee so I decided to spend the money on enjoying life. If I knew that the pension could be changed at any time I would have invested in a 457 and any other thing I could have just to have peace of mind for retirement.