Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-22-2012, 01:44 PM   #61
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,334
Quote:
Originally Posted by ERD50 View Post

Looking at your intro post, I see you have a $40,000, 3% COLA pension at 55 YO, plus SS. Let's compare that to a typical corp pension -
I may be wrong again, but I believe that pensions for public safety in workers in many states tend to be significantly better (retire earlier at a higher % of pay) than the pensions for some accountants, engineers, teachers, clerks, scientists, carpenters, etc. who work for the state.
__________________

__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-22-2012, 02:29 PM   #62
Dryer sheet wannabe
 
Join Date: Feb 2012
Posts: 14
Not that this will change any minds but, yes we did make less than in the private sector. As was mentioned, that may not be the case today, and their benefit package should be reflective of that.

My SS is based on my work history prior to and since the department, as well as part time work, and is subject to the WEP. I didn't realize that there was anything wrong with this or that for some reason it should impact the discussion of this thread.

In our City, and all that I am are of, there was no profit sharing or matching programs found in many private systems, although I did prepare for my later retirement in a 457 plan as well, but that was on my own. Should that have a negative impact on the discussions about pensions as well?

Please understand, I am not against pension reform. I just believe that commitments made should be honored.
We all make our choices in life whether Public/Private and the associated benefits and/or hazards that they each contain. What we don't get is a do over.
__________________

__________________
Flsail is offline   Reply With Quote
Old 04-22-2012, 02:46 PM   #63
Recycles dryer sheets
Brdofpray's Avatar
 
Join Date: Jan 2012
Location: Upstate SC
Posts: 242
Quote:
Originally Posted by Flsail View Post
Please understand, I am not against pension reform. I just believe that commitments made should be honored.
We all make our choices in life whether Public/Private and the associated benefits and/or hazards that they each contain. What we don't get is a do over.
+1
__________________
Don't sweat the small stuff! And realize, it is all small stuff!
Brdofpray is offline   Reply With Quote
Old 04-22-2012, 02:47 PM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by Flsail View Post
My SS is based on my work history prior to and since the department, as well as part time work, and is subject to the WEP. I didn't realize that there was anything wrong with this or that for some reason it should impact the discussion of this thread..
I don't think anyone implied there was anything 'wrong' with it, but you mentioned you are getting SS, so I referenced it.

Quote:
In our City, and all that I am are of, there was no profit sharing or matching programs found in many private systems, although I did prepare for my later retirement in a 457 plan as well, but that was on my own. Should that have a negative impact on the discussions about pensions as well?
I'm not sure why you keep saying 'negative impact on the discussions', it's just numbers, and numbers is numbers. So let's run some numbers on profit sharing and matching programs:

So your $40K cola pension @ 55 is ~ $80K cola pension at 65. A typical middle manager career mega-corp type with 30 years in might expect ~ $40K non-cola pension @ 65, which brings it down to ~ $20K equivalent to a cola'd pension.

Using the 4% SWR (x25) as a reference, that $80K cola pension would represent a 'phantom portfolio' of $2M, while a $20K cola pension would represent a 'phantom portfolio' of $500K - a $1.5M difference.

I can assure you that a career's worth of profit sharing, matching, etc would not make up anywhere near $1.5M, as I had nowhere near that in my 401K, even with my own contributions.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-22-2012, 02:55 PM   #65
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,470
Flsail, welcome to the forum. In case you hadn't noticed there is lots of passion around here when it comes to pensions.

ERD, you can't make those equivalents without considering other compensation and benefits as well, as paid over a lifetime, or at least the entire working period. The $40k is just that, no more.
__________________
MichaelB is online now   Reply With Quote
Old 04-22-2012, 02:59 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by MichaelB View Post
ERD, you can't make those equivalents without considering other compensation and benefits as well, as paid over a lifetime, or at least the entire working period. The $40k is just that, no more.
Sure, there are all sorts of external factors.

My point is that a $40K pension isn't just a $40K pension. COLA and when you can start are HUGE factors, and often times these are ignored or brushed over in comparisons between public and private pensions.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-22-2012, 02:59 PM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ERD50 View Post

So let's run some numbers on profit sharing and matching programs:

So your $40K cola pension @ 55 is ~ $80K cola pension at 65. A typical middle manager career mega-corp type with 30 years in might expect ~ $40K non-cola pension @ 65, which brings it down to ~ $20K equivalent to a cola'd pension.

Using the 4% SWR (x25) as a reference, that $80K cola pension would represent a 'phantom portfolio' of $2M, while a $20K cola pension would represent a 'phantom portfolio' of $500K - a $1.5M difference.

I can assure you that a career's worth of profit sharing, matching, etc would not make up anywhere near $1.5M, as I had nowhere near that in my 401K, even with my own contributions.

-ERD50
I'm not sure where you're going with this. The poster you're addressing obviously has a very handsome pension situation by any standards. But having said that, where are you going with this? Are you suggesting that pensions should be reviewed and trimmed or enhanced based on today's evaluation of the "fairness" or "appropriateness" of the benefit? What are you suggesting the actionable outcome be?

My own opinion is that if the public sector determines they can hire and retain qualified employees with more modest compensation packages, they should be empowered to do so, political consequences notwithstanding. But I don't think that changing compensation packages, such as pensions already earned or vacation time already earned, etc., is really fair play. And I would say this about either the public or private sector. I certainly expect the MegaCorp I retired from to come through with the pension I earned under their rules in existenance while I was working or for the pension insurance to pay it if MegaCorp is unable. I do not expect the "fairness" or "appropriateness" of my already earned but not yet started pension to be judged and modified at this stage. At 64 yrs old and 6 yrs retired, that would leave me in a bit of a pickle.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-22-2012, 03:04 PM   #68
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,334
I think we should also keep in mind that many public safety workers are required to put their own safety and health at risk to protect the public. IMHO, the public seems to feel that is worth something extra. Whether the 'extra' is excessive is another question.

Note1: Employees of Mega-corp as well as most other public employees are not asked to risk their lives and health.

Note 2: I am assuming that when he metioned being in the fire service he was actually a fireman who took risks, not an adminstrator who spent all his time at a desk issuing policy statemnents.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 04-22-2012, 03:09 PM   #69
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by Chuckanut View Post
I think we should also keep in mind that many public safety workers are required to put their own safety and health at risk to protect the public. IMHO, the public seems to feel that is worth something extra. Whether the 'extra' is excessive is another question.

Note: Employees of Mega-corp as well as most other public employees are not asked to risk their lives and health.
The amount that public safety workers are compensated should be determined in the market place. What level of compensation package attracts and retains highly qualified employees to do the job? It should not be determined by subjective discussions involving perceived worth of the activity.

Everybody's mother is sure their child is underpaid on the job. Only the market place has the correct answer.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-22-2012, 03:09 PM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by youbet View Post
I'm not sure where you're going with this. The poster you're addressing obviously has a very handsome pension situation by any standards. But having said that, where are you going with this? Are you suggesting that pensions should be reviewed and trimmed or enhanced based on today's evaluation of the "fairness" or "appropriateness" of the benefit? What are you suggesting the actionable outcome be?
No, I'm just get the impression that he doesn't fully appreciate just how good that pension is compared to the typical pensions of the taxpayers who are now being asked to support those payments. Just trying to provide some perspective.

Actionable outcome - the train's left the station. What should have been done is to have all pensions 100% funded, and an insurance program in place (similar to PBGC) to cover any problem areas. We've discussed this before. If the pensions were 100% funded, then taxpayers could have accepted it or rejected those costs in 'real time'. But coming back to the taxpayer years later and saying we owe for all those past years is a problem. And I'll go so far as to say current retirees share in that problem, as they sat by as their pension was under-funded (as did taxpayers - plenty of blame to go around)

There are no good solutions, and I hope that making changes going forward, w/o impacting the promised benefits earned to date can be done. If push comes to shove, and some adjustment is needed to current retirees, well, maybe that has to be considered. Should be about the last thing to go, IMO.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-22-2012, 03:18 PM   #71
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 867
Here is an interesting article to google, "Illinois may be broken but not the civic committee of the commercial club of chicago, dated August 26th, 2011.
__________________
ripper1 is offline   Reply With Quote
Old 04-22-2012, 03:23 PM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ERD50 View Post
No, I'm just get the impression that he doesn't fully appreciate just how good that pension is compared to the typical pensions of the taxpayers who are now being asked to support those payments. Just trying to provide some perspective.
It does appear to be a generous pension given what I know from the discussion.
Quote:

Actionable outcome - the train's left the station. What should have been done is to have all pensions 100% funded, and an insurance program in place (similar to PBGC) to cover any problem areas. We've discussed this before. If the pensions were 100% funded, then taxpayers could have accepted it or rejected those costs in 'real time'.
Exactly. Governments that allow liability to grow and be placed on the backs of future tax payers are lame. But it's going on today in places other than just pension systems. Think deficit spending in general. I agree with you. Spending should be covered with taxes real time so citizens can judge the value. But, we didn't do that.
Quote:
But coming back to the taxpayer years later and saying we owe for all those past years is a problem. And I'll go so far as to say current retirees share in that problem, as they sat by as their pension was under-funded (as did taxpayers - plenty of blame to go around)
The same thing can be said of private pensions, or course. And I do feel that several corporations where I am a stock holder have excessive pension obligations today due to past underfunding which their current pensioners saw and did nothing about. Certainly, just like the public employees, these folks in line for private DB pensions should have them trimmed as appropriate so I'm not deprived of dividends or growth in share price due to the firm struggling to fund the pension plan. Right?

Private pension recepients would be quite hyprcritical if they weren't anxious to have their own pensions trimmed if the corporation is having to scramble to catch up on pension funding today due to underfunding yesterday. I can think of at least three firms I'm involved with financially in this predicament. I'm sure as a stock holder I'd be better off if these firms were allowed some slack on these pension commitments just as I'd be better off as a tax payer if already earned gov't pensions were trimmed due to previous underfunding.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-22-2012, 03:25 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by youbet View Post
Quote:
Originally Posted by Chuckanut View Post
I think we should also keep in mind that many public safety workers are required to put their own safety and health at risk to protect the public. IMHO, the public seems to feel that is worth something extra. Whether the 'extra' is excessive is another question.

Note1: Employees of Mega-corp as well as most other public employees are not asked to risk their lives and health.

Note 2: I am assuming that when he metioned being in the fire service he was actually a fireman who took risks, not an adminstrator who spent all his time at a desk issuing policy statemnents.
The amount that public safety workers are compensated should be determined in the market place. What level of compensation package attracts and retains highly qualified employees to do the job? It should not be determined by subjective discussions involving perceived worth of the activity.

Everybody's mother is sure their child is underpaid on the job. Only the market place has the correct answer.
+1 youbet.

Chuckanut, even if we take that into consideration, take a look at the BLS figures, and you'll find that Fishermen, Truck Drivers, Industrial Maintenance workers, Farmers & Ranchers, Roofers, Loggers, and Garbage & Recyclables Collectors all face a higher hazard rate than Fire Fighters (they aren't in the top ten in this report, but I have seen them in others at ~ 15-20 down the list IIRC).

IIRC from an earlier discussion on this, the dozen years I spent on a family farm put me at a far higher statistical risk than a 30 year career as a Fire Fighter would have.

-ERD50

http://www.bls.gov/iif/oshwc/cfoi/cfch0009.pdf
__________________
ERD50 is online now   Reply With Quote
Old 04-22-2012, 03:31 PM   #74
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,470
My understanding is many of the public safety employees pensions are well funded in Illinois and do not / will not need taxpayer support. It would be a sad outcome if this funding were captured by the state and used to fill shortcomings elsewhere. It should also not be a surprise to see discussions of unfair pensions (pension envy) in the media and elsewhere as they easily change the subject and attention away from the elected political leadership, which is in all cases ultimately responsible for the mismanagement.
__________________
MichaelB is online now   Reply With Quote
Old 04-22-2012, 03:37 PM   #75
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by youbet View Post
... The same thing can be said of private pensions, or course. And I do feel that several corporations where I am a stock holder have excessive pension obligations today due to past underfunding which their current pensioners saw and did nothing about. Certainly, just like the public employees, these folks in line for private DB pensions should have them trimmed as appropriate so I'm not deprived of dividends or growth in share price due to the firm struggling to fund the pension plan. Right?
It's a matter of degrees. Because private pensions had the PBGC watch-doging them, a private pension could never get too far underfunded (ironic, isn't it?). The PBGC is dealing with it in pretty much real-time. Sure, they may come in and say, OK, this year you need to boost it by $X, but that is probably a pretty small hit to the shareholders. And if it goes on year after year, maybe that shareholder should dump his investment?

Should taxpayers accept a small hit to their taxes due to avoid cutting pensions to public workers who are already retired? Yes, I think so. But when the funding gets down to the levels it has in IL, perhaps more drastic measures need to be brought to the table.

Again, adjustments to current retirees should be about last on the list, IMO.

note to MBs last post- yes, the IL Municipal Retirment plan is reasonably well funded (80% or so, I'd have to look it up), it is the Teachers fund that is miserable (40s?) - gotta run, or I'd look them up.

-ERD50
__________________
ERD50 is online now   Reply With Quote
Old 04-22-2012, 03:42 PM   #76
Thinks s/he gets paid by the post
DFW_M5's Avatar
 
Join Date: Sep 2003
Posts: 4,982
Quote:
Originally Posted by ERD50 View Post
Actionable outcome - the train's left the station. What should have been done is to have all pensions 100% funded, and an insurance program in place (similar to PBGC) to cover any problem areas.
Just to be clear, it is misleading to assume that the PBGC will cover all mega-corp pensions $ for $ should mega-corp go belly up.
__________________
DFW_M5 is offline   Reply With Quote
Old 04-22-2012, 03:59 PM   #77
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by ERD50 View Post

Should taxpayers accept a small hit to their taxes due to avoid cutting pensions to public workers who are already retired? Yes, I think so. But when the funding gets down to the levels it has in IL, perhaps more drastic measures need to be brought to the table.

Again, adjustments to current retirees should be about last on the list, IMO.

You seem to be attempting to have both feet off the ground at the same time but, bottom line, it seems like you're a proponent of cutting the pensions of already retired public workers........ as long as they're "about last on the list." But, of course, you're fighting for the pensions of already retired private workers to be upheld even if the corporation under funded pensions in the past and are having to supplement the funds today to the detriment of stockholders.

I'll disagree. I think the sword should cut both ways. We'll see what happens. It's an ugly situation and the victims will likely be random and hapless with no regard for their personal responsibility in paying into the funds given. The bailouts during the recession seemed to go along this way. Some companies, unions and individuals made out. Others paid a price for being in the wrong place at the wrong time.

We all fight for ole #1 so I understand your position.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 04-22-2012, 04:12 PM   #78
Full time employment: Posting here.
 
Join Date: Mar 2010
Location: Chicago
Posts: 867
Quote:
Originally Posted by MichaelB View Post
My understanding is many of the public safety employees pensions are well funded in Illinois and do not / will not need taxpayer support. It would be a sad outcome if this funding were captured by the state and used to fill shortcomings elsewhere. It should also not be a surprise to see discussions of unfair pensions (pension envy) in the media and elsewhere as they easily change the subject and attention away from the elected political leadership, which is in all cases ultimately responsible for the mismanagement.
Actually the Police and Fire Dept are the worst funded in Chicago. A report by the infamous Civic Committee showed them at 37% and 30% respectively by Dec 31, 2009. They may be in a little better shape now but not much. This is from a PDF report to the Commercial Club of Chicago titled Chicago's underfunded Pension Plans.
__________________
ripper1 is offline   Reply With Quote
Old 04-22-2012, 04:27 PM   #79
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,334
Quote:
Originally Posted by MichaelB
change the subject and attention away from the elected political leadership, which is in all cases ultimately responsible for the mismanagement.
And change the discussions from those responsible for the financial crisis that has caused a huge decline in revenue for state and local governments.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 04-22-2012, 07:20 PM   #80
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Quote:
Originally Posted by Midpack View Post
May be all true, but absent any numbers it's hard to judge. If the pension benefits were the long term equivalent of the increases waived you may have an argument. However, if the pension benefits were exorbitant because incumbents on both sides knew they would never have to deal with the fiscal consequences many years later, that's another kettle of fish. There are far too many documented examples of the latter.
The debate seems to continue here in the abstract. If this is one of the latter cases, honoring obligations that were obviously unsustainable even in retrospect no matter at what cost to present taxpayers hardly seems fair. We all agree that those already in retirement must be shielded as much as possible, but it comes at the cost of benefits to future retirees and/or an increased tax burden to those still working. All indications are that's how it will play out, but those protected need to face that responsibility, to children, grandchildren, neighbors - the funds come from them, not "government." Arguing these issues in the abstract unfortunately leads to self interest (for many) and an impasse for the umpteenth time...
__________________

__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 08:58 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.