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Government workers are the richest folks? Maybe so.
Old 09-20-2008, 10:58 AM   #1
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Government workers are the richest folks? Maybe so.

As DB plans are eliminated in the private sector, your tax dollar continues to support some pretty fine DB plans. If you have the time, maybe you should consider government service after all.

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If you consider retirement security a measure of wealth, the richest among us may be government workers. Baby boomers with government pensions will exceed the number of baby boomers getting pensions in private industry, if current trends continue. Consumer Reports Money Adviser cites Boston College research showing that while 36% of private sector employees had defined benefit plans in 1992, only 19% have such plans today. That translates to about 22 million private sector employees (19% of 116 million) who get pensions. Virtually all of the 23 million government employees working today qualify for pensions. This does not count members of the military, nor employees of government-sponsored corporations like the post office.
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Old 09-20-2008, 11:01 AM   #2
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I'm sure the Treasury Department will have lots of new jobs soon!
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Old 09-20-2008, 11:04 AM   #3
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This may be true, but often overlooked and rarely mentioned is the fact that many federal employees cannot draw full social security benefits although they contribute to the program.
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Old 09-20-2008, 11:21 AM   #4
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I think what everyone needs to do is to weigh their options when deciding on a job. You can't have your cake (higher paying jobs with unreliable pension offers) and eat it too (get as good a pension as a lower paying federal job would provide when it comes time to retire).

If you are 46-47 or older, and take a federal job for 10 years, at your minimum retirement age (around 56-57) you too can get a federal pension and lifetime medical. Your pension will be worth 10% of the average of your highest 3 years' federal salary, minus your health insurance cost, taxes, etc. Whoop-de-do. It was my choice but it's not exactly the road to riches.

The rest is up to you with a 401K (TSP) with 5% match, Roth, taxable investments, and SS. You can retire on it and I am glad I have it, but it is only one leg of the four legged stool - - (pension, TSP, SS, taxable), and for me it is the smallest of the four.

A better benefit to federal employment for the type of person you won't see on this forum, is that you can continue working long past age 65 if you want to. Sure, they may make it miserable for you but they can't/don't lay you off without recourse. We have one guy in my section who must be 85 years old.
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Old 09-20-2008, 11:28 AM   #5
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I'm sure the Treasury Department will have lots of new jobs soon!
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You may have an excellent point Purron. As I recall, when the Resolution Trust was in business in the 80s/90s trying to resolve the S&L mess, they were begging for anyone with administrative or financial experience.
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Old 09-20-2008, 11:35 AM   #6
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i'm right in there with W2R's response.
i spent 18+ years as a govt employee, Elec Engineer. i knew my salary was way way way below private sector standards for that field, and annual performance bonuses were very slim...
but the TSP match, the health benefits, and the job security made up for the salary difference. the tradeoff was worth it, for me.
my deferred FERS retirement at age 56 won't make me rich. ask around and see what some govt retired folks are actually bringing in for their retirements. it's not as high as you might think.
being in private sector vs govt service is always a personal choice.
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Old 09-20-2008, 11:51 AM   #7
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At the risk of being blasted out of existence, I offer the following:

1. As a Federal employee, now annuitant, I pay taxes just like everyone else. In a sense, I paid my own salary through my income taxes, and I pay my own pension through my income taxes.
2. I pay income taxes on every dollar in pension I receive. Most Social Security recipients don’t pay taxes on their benefits, and those that do only pay on a portion.
3. I paid 7% of every dollar I ever earned as a Federal employee into my pension plan.
4. Even though I worked and paid social security taxes for enough time to earn a benefit, when I turn 62, the maximum I will get will be about $100.00 per month due to the windfall elimination provision.
5. Unlike employees in the private sector who could contribute up to 10% of their salary to a 401K, most often with employer matching funds, as a CSRS employee, by law, I was limited to contributing no more than 7%, with no matching contributions.
6. While availability of health insurance is primarily what allowed me to retire at age 56, it is by no means free, or even inexpensive. Premiums this year for my wife and I amount to $320.00 a month, and they are increasing at a rapid rate every year. My 2007 premium was $235.00 per month (a 34% increase from 2007 to 208).
7. COLA – yes it’s nice. But everyone who gets social security also gets a COLA.

It’s not a free ride.
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Old 09-20-2008, 11:54 AM   #8
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Originally Posted by Janet H View Post
This may be true, but often overlooked and rarely mentioned is the fact that many federal employees cannot draw full social security benefits although they contribute to the program.
If you're referring to GPO or WEP, the way you state the case could be somewhat misleading. For example, gov't folks with a job not covered by SS but who work another part time job that is covered by SS, do receive SS. However, since their part time job would make them look like a long term low paid worker to SS (despite their other non SS govt job), WEP steps in and adjusts their SS payout to the same percentages as folks who were making more or worked longer under SS.

That is, WEP doesn't take away from them. It simply denies them the generous payback vs. contribution that low paid folks under SS get. Even though WEP reduces our income here (DW is a retired teacher who also qualified for SS) we think WEP is fair.
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Old 09-20-2008, 11:55 AM   #9
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Originally Posted by BanDit1 View Post
Itís not a free ride.
And that is why you guys defend it so vigorously.
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Old 09-20-2008, 12:00 PM   #10
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At the risk of being blasted out of existence, I offer the following:

1. As a Federal employee, now annuitant, I pay taxes just like everyone else. In a sense, I paid my own salary through my income taxes, and I pay my own pension through my income taxes.
2. I pay income taxes on every dollar in pension I receive. Most Social Security recipients don’t pay taxes on their benefits, and those that do only pay on a portion.
3. I paid 7% of every dollar I ever earned as a Federal employee into my pension plan.
4. Even though I worked and paid social security taxes for enough time to earn a benefit, when I turn 62, the maximum I will get will be about $100.00 per month due to the windfall elimination provision.
5. Unlike employees in the private sector who could contribute up to 10% of their salary to a 401K, most often with employer matching funds, as a CSRS employee, by law, I was limited to contributing no more than 7%, with no matching contributions.
6. While availability of health insurance is primarily what allowed me to retire at age 56, it is by no means free, or even inexpensive. Premiums this year for my wife and I amount to $320.00 a month, and they are increasing at a rapid rate every year. My 2007 premium was $235.00 per month (a 34% increase from 2007 to 208).
7. COLA – yes it’s nice. But everyone who gets social security also gets a COLA.

It’s not a free ride.
In addition to most of these limitations, as a police officer, I also had to work weekeends, holidays and the evening shift for many years. I missed more than my share of my kids baseball games, family picnics, weekend gatherings...ect. I did all of that in part because I knew the retirement benefits were outstanding. Without the better than avg retirement, this country would be severely hurting for cops because the job sucks alot of the time and the pay is well below the private sector.

I pay 8.5% towards my pension and dont get any employer match to my 401k. Our health insurance plan stinks as well when compared to the private sector. Forgive me if I feel a tad annoyed when someone complains about the one real true benefit that I get as a government employee.
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Old 09-20-2008, 12:09 PM   #11
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With all due respect and the greatest thanks to people in law enforcement and the military, a lot of us who weren't employed by the government also had to work weekends, holidays, evening shifts, and missed the baseball games, etc., etc. And in our case there was never a nickle of overtime, and salaries were frozen for years besides. Not complaining about it, just stating it.

As a relative who is a teacher says to people who complain to her about how great teachers have it with the time off and the pensions (and she agrees that it is great), "so why weren't you a teacher, then?"
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Old 09-20-2008, 12:11 PM   #12
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In addition to most of these limitations, as a police officer, I also had to work weekeends, holidays and the evening shift for many years. I missed more than my share of my kids baseball games, family picnics, weekend gatherings...ect.
We all appreciate your service, but also realize that zillions and zillions of private sector folks worked similar hours and schedules.
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I did all of that in part because I knew the retirement benefits were outstanding.
Agreed We all do that with our jobs. That is, we make the decision everyday to go to work because the compensation package makes it worthwhile. No doubt, if the compensation package did not make it worthwhile, you would have found another line of work.
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Without the better than avg retirement, this country would be severely hurting for cops because the job sucks alot of the time and the pay is well below the private sector.
We all weigh job responsibilities and working conditions against the offered compensation package and try to position ourselves to do the best we can. If gov't jobs no longer offered DBP pensions, then they would have to sweeten the compensation package to the point where they have adequate qualified applicants and retention rates are reasonable. The problem with pensions being the "sweetener" is that they are vulnerable to politicians not funding them adequately in the present time and the next generation being responsible for promises being made today.

I'd like to see govt DBP pensions eliminated (phased out gracefully over time) and the compensation packages sweetened to attract plenty of qualified applicants. In this way, we'd be on a pay as you go basis instead of always building up huge debts for the next generation.

This would also eliminate the "golden handcuffs" that keep some teachers and other public sector employees on the job long after they have grown to hate it but need to stay "for the pension." I think we all know folks who are examples of this......
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Old 09-20-2008, 12:14 PM   #13
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It is a free country, anyone who thinks this is the way to riches fill out an application.
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Old 09-20-2008, 12:18 PM   #14
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I have no problem with anything you just said. The problem I have is that the original post implies that goverment workers have it made in the shade because we have a pension.

If a better plan is to do away with the pension but sweeten compensation packages in other ways, that would be fine. Just dont make it sound like we are on the gravy train because we have a pension and alot of people dont. When I hear some of my co-workers complaining about low pay, I remind them of our great pension that the private sector doesnt have just like Im reminding this board of our low pay when I hear about our great pension. Its a trade off. Its not like we have the best of both worlds or anything like that and as you said....if we have it so great, come joins us.
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Old 09-20-2008, 12:24 PM   #15
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As a relative who is a teacher says to people who complain to her about how great teachers have it with the time off and the pensions (and she agrees that it is great), "so why weren't you a teacher, then?"
Movement into the teaching field is limited by the fact that their pay structure is set up to reward longevity. In the salary schedules I've seen, a 5 year teacher make only about half of what a 35 year teacher makes, all other things being equal. So, for someone in their 30's or 40's who wants to change careers and go into teaching, they're never going to see the generous end of the longevity based salary schedule and never build up the years for that nice govt pension we all dream about.

It's all an outcome of union negotiations and is aimed to benefit those who start teaching right out of college and do only that their entire lives. It rewards them for longevity and acts as a barrier to entry to folks who want to do a career change into teaching later in life.

It worked out well for DW and, of course, I'm a happy camper for her/us. But, if I were king and could start things over, I'd have a flatter longevity based salary schedule that pays more to starting teachers (to attact the best into education programs at university) and pays senior staff less with a net impact of zero.
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Old 09-20-2008, 12:35 PM   #16
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this country would be severely hurting for cops because the job sucks alot of the time and the pay is well below the private sector.
You are not referring to salary of security guards in the private sector? Their compensation is inferior in comparison to that of a police officer.
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Old 09-20-2008, 12:41 PM   #17
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. The problem I have is that the original post implies that goverment workers have it made in the shade because we have a pension.
I think the intention of OP was to point out that the benfit of a nice DBP pension is becoming relatively more valuable as part of a overall compensation package everyday. A decade ago, when many private sector folks had DBP pensions, the comparison between public and private sector compensation packages was a comparison that included differences between the two pensions. Today it's typically a comparison of private = 401k with some sort of match vs public with 403b (or similar) with no match plus a DBP pension. The pendelum has swung heavily towards the public sector package.

Going forward I'd like to see:

1. Govt comp packages based on what it takes to attract and retain qualified employees, not based on political clout/manipulations or some perception of what is "fair."

2. A govt pension system which allows people to move in and out of govt work without killing their retirement plans. That is, fewer "golden handcuffs" keeping folks who would like to move to the private sector from moving.

3. Gov't salary schedules with less emphasis on rewarding longevity and more on rewarding skills, responsibility, etc. to allow qualified private sector folks to move into govt employment.

The idea that you need to start govt work as a youngster and stay until you're a geezer, with compensation packages set up to encourage this, makes little sense to me. I think it encourages inefficient use of our labor pool in this country.

I am NOT a govt employee hater..... I just think the compensation package structures no longer reflect whats happening in the world economy and the rapidly changing skill sets required to command the best salaries and benefits.
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Old 09-20-2008, 12:44 PM   #18
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The problem I have is that the original post implies that goverment workers have it made in the shade because we have a pension.
Sorry for the confusion utrecht.

I did not mean, and the article did not imply, that anyone has it made in the shade. The article just concentrated on the true long term value of a government pension (a good thing). I have a military pension (not included in the 23 million figure) and I appreciate and value it a great deal, but I feel that my service and sacrifice over the years is now being compensated to me on a monthly basis.

Less then, more now.
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Old 09-20-2008, 12:46 PM   #19
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An old saying "they check in but never check out" would describe government workers. It's very, very hard to leave a government job since benefits and pay increase significantly with time. The longer the stay, the better the benefit. They complain about the lower pay, the bureaucracy, and lousy assignments but continue to stay.
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Old 09-20-2008, 12:57 PM   #20
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youbet--They're trying something similar to what you describe. From almost everything I've heard, it is a miserable failure. The people working under the system are generally not happy. Several federal unions are trying to wean the agencies using the system off of it.
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