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Old 11-02-2011, 11:35 AM   #41
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Yep. Fully agree. Double dipping is simply another version of having something both ways.

I noted, and was pleased, that Illinois' new pension plan for folks hired after 1-1-2011 includes tighter limits on double dipping. That is, the number of hours you can be paid doing your old job after retiring was reduced. For example, teachers can retire and still do some occasional substitute teaching. But they can't simply be rehired as "full time substitutes."
This is a fine line. We faced this in the corporate world when knowledgeable employees retired and we absolutely needed their expertise, yet rules made that almost impossible. I remember discussions with lawyers and HR because of labor law implications (not US). Most ended along the line of "he/she can work "n" hours over "x" weeks or months and no more, end of discussion". At the time, I would object. Later, when I presided over similar meetings, my take was more along the line of "if that's not good enough management is not doing it's job".

In real life there are very few people that are really that badly needed, and if they really are that valuable, someone will always find a way to get them back on board.
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Old 11-02-2011, 11:43 AM   #42
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Why not just base the pension on the final 3 years BASE salary, with no overtime or other add-ons allowed? That's the way my pension works, and again, one of the many reasons why its in good financial shape as opposed to these other scams they refer to as pension plans.
The Hawaii pension administrators seem to want anti-spiking legislation of some sort. A bill restricting the calculation to base pay for future hires failed this last year:
Quote:
During the 2011 legislative session, a bill that aimed to redefine compensation for future public employees to include only base pay ultimately stalled. It could be revived next year.
Honolulu Civil Beat - Hawaii Retirement System Looks to Curb Pension Scams - Article
However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:
Quote:
Kalbert Young, the state's budget director, had testified that the move to count only base pay for future hires would save the state about $13.2 million a year and save the counties $19 million collectively. It would also reduce the ERS's unfunded liability by $500 million, Young wrote.
Machida said the ERS can't clearly gauge whether there's rampant abuse, but said any efforts to cut down on the system's estimated $9 billion unfunded liability are crucial. The system has 111,000 members, with close to 37,000 retirees and beneficiaries.
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Old 11-02-2011, 12:24 PM   #43
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This is a fine line. We faced this in the corporate world when knowledgeable employees retired and we absolutely needed their expertise, yet rules made that almost impossible. I remember discussions with lawyers and HR because of labor law implications (not US). Most ended along the line of "he/she can work "n" hours over "x" weeks or months and no more, end of discussion". At the time, I would object. Later, when I presided over similar meetings, my take was more along the line of "if that's not good enough management is not doing it's job".

In real life there are very few people that are really that badly needed, and if they really are that valuable, someone will always find a way to get them back on board.
If they are that valuable, find a way to compensate them enough so they choose to stay on and not retire. Offer them full time salary with part time hours. Or whatever...... But why complicate things by paying them a retirement pension and then bringing them back to work at their old job? It just seems silly. And it leaves the door open for "deals" where not-so-valuable employees get to double dip strictly as a means to game the system and achieve double pay for doing the same job.

For example, when CEO's or other highly compensated corporate executives retire with ultra-generous packages and then the BOD brings them back to consult for high fees........ Hey, if they really need the guy, pay him to stay. Otherwise, bye bye.
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Old 11-02-2011, 12:35 PM   #44
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However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:
While curbing spiking may or may not make a significant difference to the financial positions of pension systems (depending on the system and the local circumstances), spiking should still be eliminated. I like systems where a five year (or more) final average salary is used and where only base pay is part of the calculation. The less "wink-wink" involved the better IMHO.
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Old 11-02-2011, 03:42 PM   #45
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Some of these pensions are unbelievable. One is higher than the salary of the US president! You know pension reform is sweeping california when the LA Times has a whole page of linked articles to the issue.

http://www.latimes.com/news/local/la...1.storygallery

I know this doesn't represent the typical pension, but CALPERS is coming after some of the excessive pensions. Some might be getting a pretty good haircut!

So far, the state retirement board has reviewed 2,250 retirement payments and found that 329 needed to be reduced, mostly because employers incorrectly reported employees' pay. They include a former general manager at the Serrano Water District in Orange County whose pension was reduced because the salary it was based on -- $206,668 -- was too high. A retired Vallejo city manager's pension was reduced when his salary was adjusted from $305,842 to $216,000.

CalPERS has also dramatically cut the pensions of top officials in Bell after an audit determined that they were improperly inflated, according to records obtained by The Times under the California Public Records Act.

Former City Administrator Robert Rizzo is now set to receive $50,000 per year. Before, he had been poised to get $650,000 a year from CalPERS and more than $1 million annually overall when a second pension from the city was included. The pension of his assistant, Angela Spaccia, was slashed from a projected $250,000 to $43,000.

The aggressive review comes amid criticism of high pensions paid to some officials, even those accused of wrongdoing.

Vernon's former city administrator receives the highest pension of any public official in California, $500,000, even though he was convicted of public corruption.
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Old 11-02-2011, 04:47 PM   #46
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Those naked walkers are ruining the state budget. If we can stop this outrage, all will be well. And OMG, those naked bicyclists must be stopped!
It gets better though. Some years back, I read of government giving incentives to some internet sex start-up, to rehab the old San Francisco National Guard Armory into a BDSM dungeon.
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Old 11-02-2011, 04:53 PM   #47
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The worst that I heard (and do not know how it works) was a Chief of Police got a big pension increase when the mayor gave him a salary increase just before he retired... it cost the pension plan millions of dollars.. he only got ONE paycheck at that higher rate but it was enough for the much higher pension... I think they have fixed that... but am not sure...
While that may be a sterling example of abuse, that system also describes the old military "Final Pay" system.

As I started the final six months of my 20 years, the Navy decided that it needed to retain O-4s. It did so by giving all of us a "targeted raise" of 6.5% (including to those with more than 18 years of service) even though at least 10% of the Navy's O-4s would be required by law to retire that year.

DoD could have targeted that pay raise a little more precisely (as in "O-4s with 10-17 years of service") so we "senior" O-4s felt that DoD was finally attempting to recognize our true value. That extra $324/month has been getting the same COLA boost for the last decade as the rest of my pension... and it will for the rest of my life.

But now the pension is based on "High Three", so perhaps other states & municipalities are following some sort of federal example.

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My problem with double dipping is that it rubs against the spirit of retirement pension. If a group of people can retire at a young age but continue working the pension start date is too early. This proposal addresses part of this by making the retirement age the same as for social security. Public safety still needs to be addressed.
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Yep. Fully agree. Double dipping is simply another version of having something both ways.
I highlighted that last sentence in bold because presumably it's OK for police, firefighters, and military to be "double dipping". I don't think the pension start date is too early-- I think the occupational hazard is too high.

I don't know about the rest of the state/federal government services, but the military gets pretty prompt feedback when its pay & benefits package is judged to be too low. Next time we complain about govt services it might be worth reflecting on "getting what we pay for".

Most Americans "waste" billions of dollars every year on theft & fire insurance. Govt services have carrying costs, too, whether we actually need them that year or not.
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Old 11-02-2011, 05:01 PM   #48
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Yep. Fully agree. Double dipping is simply another version of having something both ways.

I noted, and was pleased, that Illinois' new pension plan for folks hired after 1-1-2011 includes tighter limits on double dipping. That is, the number of hours you can be paid doing your old job after retiring was reduced. For example, teachers can retire and still do some occasional substitute teaching. But they can't simply be rehired as "full time substitutes."
There's another loop hole, and that's the community college system. Which is a separate retirement plan. The faculties of these colleges are full of retired high school teachers.
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Old 11-02-2011, 06:45 PM   #49
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My problem with double dipping is that it rubs against the spirit of retirement pension. If a group of people can retire at a young age but continue working the pension start date is too early. This proposal addresses part of this by making the retirement age the same as for social security. Public safety still needs to be addressed.

Exactly. I know both cops and firefighters in California who have put in their twenty years retired in their early 40s, then started working at different city in California. The cop continued the same career, the firefighter took a civil service job. I understand that jobs like cops and firefighters are dangerous and often are physically demanding. It seems to me that there is wide range of desk jobs or things like a Fire inspector. That don't have the same physical demands.

At the very least there should be an accurate actuarial reduction for people retiring before 55 on anything other than a job related disability.
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Old 11-02-2011, 06:57 PM   #50
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The Hawaii pension administrators seem to want anti-spiking legislation of some sort. A bill restricting the calculation to base pay for future hires failed this last year:

"Kalbert Young, the state's budget director, had testified that the move to count only base pay for future hires would save the state about $13.2 million a year and save the counties $19 million collectively. It would also reduce the ERS's unfunded liability by $500 million


However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:
$500 million liability reduction, and $32 million/year isn't real money in your opinion? There only 400,000 households in the state so that $1250/household less debt obligation, and $80/year, and more than the state spends on library system. I am pretty sure given a choice between keeping pension spiking or making further library cuts I know how the public would vote.
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Old 11-02-2011, 07:06 PM   #51
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Yep. Fully agree. Double dipping is simply another version of having something both ways.
Just to take the other side:
Why shouldn't the public sector be able to hire the most qualified person for an opening (i.e. why should the person not be hired, or be paid less, if he/she happens to be a retiree from the state system).

Conversely, if a state employee has earned a pension and chosen to retire, why should those retirement benefits be reduced if the individual subsequently takes another public sector job? The benefits wouldn't be reduced for a private sector job, right?
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Old 11-02-2011, 07:06 PM   #52
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The worst that I heard (and do not know how it works) was a Chief of Police got a big pension increase when the mayor gave him a salary increase just before he retired... it cost the pension plan millions of dollars.. he only got ONE paycheck at that higher rate but it was enough for the much higher pension... I think they have fixed that... but am not sure...
I know that case you mention (know the man in question as well), and we've discussed it here in the past. He will have to live to about 125-years-old before the extra money that last minute pay raise will cost the pension system the first million.
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The raise means an extra $1,054 for the chief, before taxes, and brings his annual salary to $154,024. Paperwork processed Wednesday says the raise started Aug. 30. More significant is how the raise improves Bradford's pension. Retirement benefits for all Houston police officers are based in part on their peak pay. The change automatically hikes Bradford's annual pension by about $9,000 to $95,630, city Finance and Administration Director Philip Scheps said.
Bradford carried some serious heat and weight for the mayor, ("Crime Lab Fiasco", or Operation E-Racer ring any bells?) and this was the mayor paying him off for catching bullets that could have should have hit the mayor. Plus there was a significant drop in crime during his tenure - some might call it a performance bonus.

Was it wrong? Most definitely, but Lee Brown was famous for this kind of abuse of the pension system. Talk about Pension Holidays, that man tried to put the city on a permanent Pension Vacation. At the same time he was using increased future pensions to convince about 35% of the police department to stay on the job during a time in which the labor market was very competitive and the city's efforts to hire new officers were a miserable failure. He didn't care because all the pension costs were rigged to take place right after he was mandated to leave office due to term limitations. The pension system eventually straightened it all out with the next administration - it took a lawsuit against the city - but things are fixed now for the most part.
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Old 11-02-2011, 07:26 PM   #53
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$1250/household less debt obligation,
As I understand it, the state's current plan is to increase taxes/fees/employee contributions over 30 years to achieve full funding of the pension fund, probably assuming 7.75% earnings on the portfolio. So maybe you could estimate how much each household will save each year through the anti-spiking bill if passed? I admit I haven't worked it out, but my intuition is that it is not real money.
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Old 11-02-2011, 08:22 PM   #54
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I think a 3 year average to avoid spiking is probably fine. My state has 5 year averaging which in inflationary times (OK, not to worry at the moment) can punish a retiring worker quite a bit. Also, if the spiking is employee chosen that is one thing. On the other hand if the employer simply requires a lot more work than normal and is willing to pay for it in extra dollars, is that really spiking, or just a way of paying the worker what he/she should already be earning? just a thought.
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Old 11-02-2011, 08:27 PM   #55
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I should note that in my state, most public employeers are covered by a reasonable but certainly not extravigent pension system. However, public safety people (police, firemen, sheriffs) have a much sweeter deal with earlier retirement at a higher percentage of pay. I think prison guards are required to retire after 20 years. I am not sure how I would handle this issue.
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Old 11-02-2011, 11:41 PM   #56
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I think a 3 year average to avoid spiking is probably fine. My state has 5 year averaging
5 year averaging is a good number, fair to both the employee and the tax payer (or private employer).
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Also, if the spiking is employee chosen that is one thing. On the other hand if the employer simply requires a lot more work than normal and is willing to pay for it in extra dollars, is that really spiking, or just a way of paying the worker what he/she should already be earning? just a thought.
If the employee works overtime or receives large bonuses in the final years, good for him! But these payments should not be part of the pension calculation.
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Old 11-02-2011, 11:52 PM   #57
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As I understand it, the state's current plan is to increase taxes/fees/employee contributions over 30 years to achieve full funding of the pension fund, probably assuming 7.75% earnings on the portfolio. So maybe you could estimate how much each household will save each year through the anti-spiking bill if passed? I admit I haven't worked it out, but my intuition is that it is not real money.
Sounds like the anti-spiking bill should be passed immediately! In these tough times, tax payers will appreciate the savings even if they are modest and the employers and employees who have been gaming the system using spiking won't mind because "it is not real money."

It's a win-win!
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Old 11-03-2011, 12:05 AM   #58
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For PERS (Public Employees Retirement System) and STRS (State Teachers Retirement System), only base salary is subject to the contribution. Vacation payoffs, overtime, extra pay, longevity--these are split out on a separate line and are not part of the annual salary.

I work for a K-12 school district. In our district, for PERS, the employee has a 7% deduction and the employer makes a 13.02% contribution (they also have the 6%/6.2% Social Security deduction/contribution). For STRS, it's 8%/8.25% (with no Social Security).

Most of the proposed reforms are sensible and needed. It's going to take several years, though, to see these approved and implemented.
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Old 11-03-2011, 12:43 AM   #59
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Just to take the other side:
Why shouldn't the public sector be able to hire the most qualified person for an opening (i.e. why should the person not be hired, or be paid less, if he/she happens to be a retiree from the state system).
I think you and I have different definitions of "double dipping." If an accountant for the Illinois Dept of Motor Vehicles retires at 55 yrs old and takes a job as a truck mechanic for the Village of Naperville, that would be fine with me. But if the accountant retires from his job on Friday with a hefty pension (thanks to a generous formula and spiking ) and returns to his desk as a well compensated contractor on Monday, that's double dipping. Here in Illinois, I'd assume that situation isn't because he's the most qualified person but rather because he's politically connected, has done past favors for someone or is paying off someone.
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Conversely, if a state employee has earned a pension and chosen to retire, why should those retirement benefits be reduced if the individual subsequently takes another public sector job? The benefits wouldn't be reduced for a private sector job, right?
If the person wants to retire from his job, he should. But that retirement shouldn't be based on also returning to and continuing the same job the following Monday. If he wants to go find a job in another public organization (under another public pension system), fine. In fact, I endorse that. If he wants to work in his current organization, rather than retire he should just stay on.

The double dipping common here in Illinois involves returning to your old job, or a similar job under the same pension system, immediately after retiring. Frequently, it involves being "connected" to the right people.
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Old 11-03-2011, 02:47 AM   #60
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If the person wants to retire from his job, he should. But that retirement shouldn't be based on also returning to and continuing the same job the following Monday.

The double dipping common here in Illinois involves returning to your old job, or a similar job under the same pension system, immediately after retiring. Frequently, it involves being "connected" to the right people.
This is pretty much my definition of double dipping. I actually think there is reasonably easy (although politically unpopular) solution, which is the same as Social Security uses for older workers, namely defer their current social security benefits on prorated basis based on their wages. Although this pisses off older workers, everybody I've heard form SS says that the system treats everybody fairly.

The bottom line is that pension system should be designed so the lifetime cost to the state should be the same regardless if the person retires at 55 and then works as contractor for a couple year, or stays working.
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