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View Poll Results: What's Included in Base Salary in your Public Pension System?
Anything and everything! 2 11.76%
All hours worked, whether regular or overtime, with or without premimum pay. 0 0%
Regular hours plus some othersóe.g unused vacation or sick time. 5 29.41%
Regular hours plus possibly some buybacks. 4 23.53%
Regular hours, in this system only. No other hours or buybacks of any kind. 6 35.29%
Other, or my pension system does not use a base salary to calculate pension benefits. 0 0%
Voters: 17. You may not vote on this poll

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Public Pension System Base Salary Calculation
Old 10-23-2010, 02:46 PM   #1
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Public Pension System Base Salary Calculation

This is the last of the public pension polls (unless I think of another one ). A number of E-R threads have related anecdotes of sky-high public employee pensions, a result which seems in many cases to be produced by employees in those systems being able to include everything but the kitchen sink in the base salary from which their pension benefit is calculated.

The aim of this poll is to see what was counted toward a typical E-R public employee or retiree's base salary. Was it regular hours only? Overtime? Unused vacation time? Are "spiking" and similar abuses even possible under the rules that determined your benefit amount? Please vote according to what is allowed under the rules where you work or worked. I'm not asking if you personally "gamed the system", or if you know that other employees were doing so. A well-thought-out pension plan, IMO, eliminates abuses before they can occur, and I'd like to find out if the systems E-R members are in were well thought out or not.

I would say that the Seattle retirement system (with the exception of a flawed Floor COLA ordinance which I described in another of the poll threads) is well-thought-out. I don't think it would be possible to "spike" a pension under our rules. To quote from the Retirement Handbook, a Seattle retiree's pension benefit is based on the "highest 24 consecutive months‟ average rate of pay, regardless of when that rate was earned....Only 2088 hours of employment in any one year period will be counted for retirement service credit or used in calculating final average salary. Overtime, bonuses, or premium pay is not included in the Average Salary." Some "buybacks" are permitted, including time worked for the City as a temporary before being hired as a permanent employee, time worked in some other public pension systems, and up to five years of active service in the military prior to City employment. I voted "regular hours, plus some buybacks" even though I personally am not eligible for any of the latter.
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Old 10-23-2010, 03:50 PM   #2
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Quote:
Originally Posted by kyounge1956 View Post
...A number of E-R threads have related anecdotes of ...

The aim of this poll is to see ...
Except, all you are going to get is more anecdotes. And as it has been said, the plural of "anecdote" is not "data".

Seriously, if you want to try to get a reasonably accurate view of the profile of public pensions, you are going to have to find some data. Something that shows in maybe quintiles, or standard devs or something.

Made up example:

The median contribution % for contributions made in 2008 among public employees with pensions was:

Lowest Quintile: A.A%
Fourth Quintile: B.B%
Third Quintile: C.C%
Second Quintile: D.D%
Top Quintile: E.E%

Now, if we had that sort of data for all the questions you have posted it could be quite enlightening. But a scattering of self-selected answers from this forum... well, I'm not sure that we could tell anything at all from that. Including whether the answers are honest or not (private sector employees with an ax to grind might decide to vote, public sector employees might want to 'embellish' to make a point).

So I applaud the intent, but the methodology is suspect. Sorry.

-ERD50
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Old 10-23-2010, 03:52 PM   #3
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My pension uses the "highest 3 years" of my base pay to make the calculation. Not only is overtime not included, but over the years as our pay has been increased, it was increased by leaving our "base pay" the same and adding things like an additional $500 per month for being certified as a "Master Peace Officer". This helps now, but does not add to my pension at all. Things like shift pay, language pay, hazardous duty pay..etc are not included in our base pay and dont count towards pension benefits.

I'm not complaining. My pension is still very generous compared to most, but there is no "spiking" or other ways to collect more than 100% of my working salary like you might hear about other places.
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Old 10-23-2010, 04:12 PM   #4
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Quote:
Originally Posted by kyounge1956 View Post
This is the last of the public pension polls (unless I think of another one ). A number of E-R threads have related anecdotes of sky-high public employee pensions, a result which seems in many cases to be produced by employees in those systems being able to include everything but the kitchen sink in the base salary from which their pension benefit is calculated.
I think you missed the key points.
1. % of government employees with a pension vs private sector
2. Similar job comparison - % of government employees with a pension vs private sector
3. Total value pension comparison for similar job comparison of those with a pension - gov't vs private.

Without doing the research (as I often recommend) my gut tells me that government employees come out ahead in all of the above. And as time goes on the % of private sector jobs with a pension and the benefits will decline faster than (if) any decline in government pensions.

Covet thy neighbor


Because those that do are mostly very large employers, about 21 percent of all private-sector employees are covered by a defined-benefit pension. On the other hand, 53 percent of private-sector workers had access to defined-contribution retirement plans, and 42 percent participated. On the public side, about 90 percent of 16 million local and state workers are covered by a defined-benefit pension, levels that have changed little of late. For all the media hype about private firms terminating pension plans and adopting 401(k)s, only a few public pensions have taken that step—most notably in Michigan.


++++++

Local and state pension plans also incur more retirement expenses due to annual, upward adjustments in pension annuities. For example, about two-thirds of public pensions offer automatic cost-of-living adjustments (COLAs), according to Keith Brainard of the National Association of State Retirement Administrators. Such adjustments can tack on as much as 3 percent every year to public pensions. Most also add adjustments based on investment returns, which typically padded annuities by anywhere from 2 percent to 8 percent in many plans during the roaring 1990s.
Such benefits are rare in the private sector, said Dimitry Mindlin, a managing director with Wilshire Associates, a global investment consulting firm. "I don't believe a single client of ours has [a COLA]."
It appears that most local and state employees can also depend on at least a small health care subsidy in retirement (see related article on GASB 45). That's becoming rare in the private sector. According to a 2005 report by the Kaiser Family Foundation, the share of large private employers (those with 200 or more employees) offering retiree health coverage has dropped from 66 percent in 1988 to 33 percent last year.


+++++
As I said before, non of these comments are a slam on the government employee. There pensions provisions were approved by elected officials.
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Old 10-23-2010, 04:16 PM   #5
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Originally Posted by utrecht View Post
My pension uses the "highest 3 years" of my base pay to make the calculation.
Same here. I didn't get paid by the hour, so I couldn't figure out how to vote.
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Old 10-23-2010, 04:19 PM   #6
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Originally Posted by ERD50 View Post
Except, all you are going to get is more anecdotes. And as it has been said, the plural of "anecdote" is not "data".

Seriously, if you want to try to get a reasonably accurate view of the profile of public pensions, you are going to have to find some data. Something that shows in maybe quintiles, or standard devs or something.

Made up example:

The median contribution % for contributions made in 2008 among public employees with pensions was:

Lowest Quintile: A.A%
Fourth Quintile: B.B%
Third Quintile: C.C%
Second Quintile: D.D%
Top Quintile: E.E%

Now, if we had that sort of data for all the questions you have posted it could be quite enlightening. But a scattering of self-selected answers from this forum... well, I'm not sure that we could tell anything at all from that. Including whether the answers are honest or not (private sector employees with an ax to grind might decide to vote, public sector employees might want to 'embellish' to make a point).

So I applaud the intent, but the methodology is suspect. Sorry.

-ERD50
I never claimed it was going to be a statistically valid survey. I don't have the expertise to do one, and even if I did, E-R members taken as a whole, let alone the sub-set of members who reply to polls, are nowhere close to a random sample. (Remember, for example, the immense excess of INTJ's on the forum, compared to the general population?) But the thread(s) to which I'm responding were not statistically valid samples either. They also were "selected"óby the news outlets that decided which stories to publish, as well as by the forum members who decided to post them here.

Even if all I've accomplished is a battle of the anecdotes, the results of the polls, taken together with the earlier threads, present a wider cross section of public employees, than the, IMO, very one-sided picture that was being presented before, and that's what I intended to do.
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Old 10-23-2010, 07:07 PM   #7
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Originally Posted by dex View Post
I think you missed the key points.
1. % of government employees with a pension vs private sector
2. Similar job comparison - % of government employees with a pension vs private sector
3. Total value pension comparison for similar job comparison of those with a pension - gov't vs private. (snip)

+++++
As I said before, non of these comments are a slam on the government employee. There pensions provisions were approved by elected officials.
Those weren't my key points, and I'm not at all sure they were the key points of the threads that prompted this series of polls. AFAIK, nobody is disputing the first two of your three points. I certainly am not. I don't have any personal knowledge on the third one, because I have never worked the same job, or even similar jobs, in both public and private sector, but it would not surprise me if that were an accurate statement also. I do think though, that the examples presented have been extreme and atypical as compared to the full spectrum of public employment, and are therefore not good evidence for advocacy of decreases in public employee retirement benefits, conversion of public DBP systems to defined contribution, or the like.
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Old 10-23-2010, 07:10 PM   #8
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Same here. I didn't get paid by the hour, so I couldn't figure out how to vote.
Then you'd be "other", I guess.
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Old 10-23-2010, 11:22 PM   #9
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I never claimed it was going to be a statistically valid survey. .... But the thread(s) to which I'm responding were not statistically valid samples either.
OK, but I don't think the other threads were presenting themselves as representative either. I keep re-reading that post you are so upset with to call it out specifically, and I don't see that. It merely said that the pension described seemed excessive to him, he didn't say it represented all/most public employee pensions. But it seemed clear that it wasn't unique either, and that people with similar histories in that area and others like it would be getting similar pensions. We'd need some numbers to know if those are wide-spread enough to be a significant financial drain on the municipality, but it can't help.

I think you should re-read it. You seem to be fighting a battle with no enemy.

Quote:
Even if all I've accomplished is a battle of the anecdotes, the results of the polls, taken together with the earlier threads, present a wider cross section of public employees, than the, IMO, very one-sided picture that was being presented before, and that's what I intended to do.
I doubt I'm unique, and pitting anecdote against anecdote does nothing for me. I see it all the time. W/o something to put it in context, it's pretty meaningless. If we surveyed the families of people who died on the operating table we'd get anecdotes that would indicate we should stop performing surgeries. We need context to know if overall surgery helps or hinders. Yet, I know of people who have died from and people who have been saved by surgery; I have the wide cross section, and it alone tells me nothing that I can base a decision/judgment on.

Quote:
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I do think though, that the examples presented have been extreme and atypical...
And if only we had some data, we could evaluate that. I think you are right, but I also think it was not the point of those posts to say they were typical, only that they could be a problem. But it could be interesting to see what is 'typical'.

-ERD50
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Old 10-24-2010, 01:08 AM   #10
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OK, but I don't think the other threads were presenting themselves as representative either. I keep re-reading that post you are so upset with to call it out specifically, and I don't see that. It merely said that the pension described seemed excessive to him, he didn't say it represented all/most public employee pensions. But it seemed clear that it wasn't unique either, and that people with similar histories in that area and others like it would be getting similar pensions. We'd need some numbers to know if those are wide-spread enough to be a significant financial drain on the municipality, but it can't help.

I think you should re-read it. You seem to be fighting a battle with no enemy.



I doubt I'm unique, and pitting anecdote against anecdote does nothing for me. I see it all the time. W/o something to put it in context, it's pretty meaningless. If we surveyed the families of people who died on the operating table we'd get anecdotes that would indicate we should stop performing surgeries. We need context to know if overall surgery helps or hinders. Yet, I know of people who have died from and people who have been saved by surgery; I have the wide cross section, and it alone tells me nothing that I can base a decision/judgment on.



And if only we had some data, we could evaluate that. I think you are right, but I also think it was not the point of those posts to say they were typical, only that they could be a problem. But it could be interesting to see what is 'typical'.

-ERD50
OK, here is one piece of data, based on the information linked by dex on one of the other polls: in 2008, there were a total of 11,039,250 full time state and local government employees, who that month earned a total of $45,525,261,002, which is a mean salary of $4,206.54 per month or just under $50,500 a year. The police officer's pension cited was more than twice that much. I think I can be excused for describing it as "atypical and extreme".

As for fighting a battle with no enemy, I think the "enemy" is a pervasively negative opinion (not just at E-R, it's very widespread) about government that spills over into attitudes about government employees. When I recall E-R threads relating to public workers, the recent thread about six-digit pensions and the scandal in California with the town employees who paid themselves those outlandish salaries, occur to me from relatively recent threads, but I'm drawing a blank trying to think of one that started with a story or link that took a positive or even neutral view of government employees, other than the military? It is the one-sidedness that gets to me. If you can think of one that doesn't start from the assumption that there is something wrong with government and those of us who work for it, then please tell me, because I'm getting depressed.
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Old 10-24-2010, 11:10 AM   #11
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emphasis mine:

Quote:
Originally Posted by kyounge1956 View Post
OK, here is one piece of data, based on the information linked by dex on one of the other polls: ... full time state and local government employees, who ... earned a mean salary of ... just under $50,500 a year. The police officer's pension cited was more than twice that much.
OK, some data - good. Now be careful how you interpret the data. In a following post on that thread, and example is given of a different officer:

Quote:
When he retired in 2003, his base pay was about $62,000. But his city retirement? About $92,000 a year, not counting medical benefits.
So we have a pension worth nearly twice the salary (assuming the health benefits are near what I need to pay for mine). So if we are going to discuss pensions, we need pension data. Pension amount, COLA type, when it can be taken, estimate of HC and other benefits, etc.

Quote:
I think I can be excused for describing it as "atypical and extreme."
Fine, and I keep saying that I don't see where anyone suggests that it isn't. And without data, we don't know how rare or pervasive it is either. That doesn't mean it isn't a problem. Serial killers are not typical of the population at large either, yet they make headlines and they are a problem.

Quote:
As for fighting a battle with no enemy, I think the "enemy" is a pervasively negative opinion (not just at E-R, it's very widespread) about government .... but I'm drawing a blank trying to think of one that started with a story or link that took a positive or even neutral view of government employees...
And of course, this forum and others are just full of stories like:

"Hey, just wanted to let you know I went into town today to conduct some business with a private company, and it went OK".

People don't talk much about things going as expected, they talk about the exceptions. I bet if you look, you will find examples here of brave police and firemen. Let's face it, the typical day in the life of the typical office worker or engineer, whether employed in the private or public sector, just isn't worth starting a conversation about. You're no different from your private counterparts in that regard. Plenty of negative threads about CEOs, BODs and crooked dealing in private companies if you open your eyes to it. Everyone loves their cable company, right?

-ERD50
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