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Old 03-07-2015, 02:50 PM   #21
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I knew I should have been a high school basketball coach...

It just depends on the state and also the school, too. If I had stayed at my first school, coached and completed 30 years, my pension would be about $30k a year and no social security either. Fortunately I didn't.


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Old 03-07-2015, 03:05 PM   #22
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Short of buying CDS on the issuer I'm not sure what one could do to protect a pension.
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Old 03-07-2015, 03:34 PM   #23
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Some enterprising insurance company should start offering pension insurance...

I have 15, and counting, years vested into a state pension system. As far as I can tell it is well funded, conservatively invested, and so on. I believe my state is considered to have generally one of the best run pensions in the country.

I believe we have a well run pension system because it is not only used for state employees but also for the state legislators... The pension director also has independence from the governor...

If I keep working I'll be able to retire off the pension at 55. The pension has yearly COLA. The payout will also be way more than I need seeing as it is based on my income (I only spend 50% or less of my w-2).

Anyway... with my taxable investments I am already able to fund roughly 50% of my living expenses from taxable dividends. I'll turn 39 this year and I doubt I will still be working by 55, but it is nice to have a cap, if you will, on how long I have to work.

Sometime between 39 and 55 I will be either early semi-retired (ESR) or completely retired....
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Old 03-07-2015, 10:19 PM   #24
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Average public pension amount in MA is $29k with a 3% COLA on the first $13k. Public employees don't get SS which saves that state a lot of money in FICA contributions. Employees contribute 11% to the pension, MA is supposed to pay in 5%.....they weren't good at doing that in the past but have been making catch up payments since 2010. The pension is 75% funded with a goal of 100% funding by 2036. In 2012 the earliest retirement date was increased for new employees from 55 to 60 and the pension calculated from the average of 5 highest salary years rather than 3.

In many studies MA's state pension is ranked poorly because of the drop in funding level post 2008 and for poor state contributions, that has been well addressed, but mostly because the level of benefits is significantly less than in many other states and because the employees have to make large contributions.
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Old 03-08-2015, 06:55 AM   #25
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Some enterprising insurance company should start offering pension insurance...
Above would be great. Googled "pension insurance" and appears there's some European companies, ING and Veritas, that seem to offer something close.

Wish there were tools to assess the risk. I can't tell if odds of Megacorp DB paying until I die are 10% or 90%.

Many private companies seem like they want to contain/minimize the pension risk - so they are transferring this risk to insurance companies and/or offering lump sum buyouts.

I'll bet state / local governments and union pensions start doing the same.

GM to cut about one-fourth of U.S. pension liability | Reuters
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Old 03-15-2015, 05:12 PM   #26
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The latest AARP magazine article has an article that brings a new dimension to pensions, namely about pensions that have been calculated incorrectly (often over many years), where the plan is now reducing the amounts, and then also reclaiming amounts already paid.
While this obviously would only affect a limited number of pensions, the ramifications of reducing pensions is also discussed. There are further legal aspects that could prove to be interesting... where pension plans were badly administered, with resulting losses. In some cases lawsuits may be instituted to sue the insurance companies, who were paid to protect the pension administrators. The lawsuits could ask the insurance companies to cover the losses due to malpractice by the administrators.

http://http://www.aarp.org/work/reti...sion-away.html

...and so it goes.

The Illinois situation is heating up in the Chicago newpapers.
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Old 03-15-2015, 07:49 PM   #27
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I couldn't get above link to work

Is Your Pension at Risk of an Overpayment? - AARP
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How to protect your pension?
Old 03-15-2015, 07:57 PM   #28
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How to protect your pension?

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I couldn't get above link to work



That'll happen if it's an ill-formed URL. (perhaps posted under duress)
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Old 03-15-2015, 08:42 PM   #29
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Anyone with a small brain could figure out my pension...28 years times 2.3% , times final 3 year ave. When I received my first check I noticed it was almost $300 more than I pegged it. Should I call and report it? Well I decided lets just see how it plays out... Well that didn't take long...the second month it was about $600 less as they confiscated it immediately. So it wasn't until my 3rd check I truly got what I was supposed to.


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Old 03-16-2015, 12:12 PM   #30
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www.pbgc.gov - you guys ever take the time to read the material on this site?
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Old 03-16-2015, 12:28 PM   #31
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www.pbgc.gov - you guys ever take the time to read the material on this site?

I personally haven't. But then again I have no reason, as they won't provide a penny of assistance to my pension system if it failed since it is a state trust funded pension.


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Old 03-16-2015, 12:40 PM   #32
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www.pbgc.gov - you guys ever take the time to read the material on this site?
Yes - in particular calculating how much of my pension would exceed the guarantee cap under various scenarios (ie drawing early).
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Old 03-16-2015, 12:45 PM   #33
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www.pbgc.gov - you guys ever take the time to read the material on this site?
Yes, I looked it over a few years ago. I checked the limits they cover on pensions that fail, just out of curiosity. The amount of the monthly pension I will receive in a few years falls FAR below the upper limit they cover, believe me!

After some of the horror stories I have heard of underfunded pensions, I thank my lucky stars every single day for my plan. Just received the annual funding notice last week - it is currently funded at 142%, and no, that is not a typo. My employer overfunds it every year. They are very fiscally responsible. I only wish all employers were as conscientious with their plans.
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Old 03-16-2015, 12:56 PM   #34
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I just received a letter with the annual pension fund status. Turns out the gov has enacted new rules to calculate what "100% funded" actually means. By the old rules, the pension was 100% funded. New rules- 84%. The new rules take into account the lower interest rates and such that the current investment environment is dealing with.

If I remember correctly, the funding requirements had a max and min requirement. This is left over from the days when companies had over funded pension plans. The corporate raiders would buy the companies, cash out the excess funds, sell out the companies, and walk away with the excess cash. Basically, the companies that had great pension funds painted a target on their back. I also believe that there were companies that were hiding excess profits in the pension fund to avoid taxes. So the gov had rules on how much you could fund.

When you would have big market drops, if the pension fund was invested in the market, then you would also see a suddenly underfunded condition. I know the company I used to work for got into that condition around 2000. The value of the pension fund took a big hit, plus they were limited on how much they could put back in.

In many ways, maintaining a healthy pension fund is similar to our retirement investments. Where do you put your money so that it is getting a good return but yet reasonably 'safe'.
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Old 03-16-2015, 01:12 PM   #35
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Yes - in particular calculating how much of my pension would exceed the guarantee cap under various scenarios (ie drawing early).
agreed - there is a pretty steep haircut on the cap for early retirees - I believe the cap is actuarially reduced prior to age 65
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Old 03-16-2015, 02:54 PM   #36
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The latest AARP magazine article has an article that brings a new dimension to pensions, namely about pensions that have been calculated incorrectly (often over many years), where the plan is now reducing the amounts, and then also reclaiming amounts already paid.
Interesting.

When I was covered by a union contract there was a provision in it to cover over or under payments to the employees. Basically, the most employer or employee could go back and recover was three years. While some may not consider that 100% fair, it kept both sides from being taken to the cleaners in the event of a long term, chronic error. It also allowed for a choice between a lump say payment or stretching it over 12 months.

There were several occasions where it needed to be invoked, usually involving teachers who taught extra classes or took on certain additional 'administrative' tasks.

One would think a similar provision would be useful in the pension system.
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Old 03-16-2015, 03:22 PM   #37
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Pretty sad that a 30 year HS "athletic dept" guy gets a better pension than 99% of anyone who's ever served in the military for that long.
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