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Old 12-01-2008, 08:24 PM   #21
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I've been dismayed at the tone that I've recently observed in the media - and that I've also heard parroted by individuals - concerning pensions that are due to common workers, be they automotive or State, etc.

Pensions, however much in decline, are a moral and/or legal obligation of employers. They are not a scam. They have long been a vehicle by which employers could attract and retain employees.

The salaries provided by my own employer have for far too many years been severely curtailed relative to both inflation and our peers. Yet employees remain loyal, in part due to their modest stake in the pension system. This benefits everyone.

Recently, the media (quite possibly goaded by lobbyists) has more and more frequently claimed that pensions are a significant reason why the big-three auto manufacturers in the U.S. aren't able to compete. In that context, a slyly-oblique suggestion is often made that these companies *should* enter bankruptcy, or at least threaten to, so as to in some way gain relief from this terrible burden.

Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats. In response, I say the following: If *I* don't have a pension, why should anyone else? Indeed, we can't compete and have pensions too! They are destroying our very way of life! Throw them overboard entirely or, if we must, dump them into government insurance programs where those tired old life-long slackers get the cut in benefits that they have always deserved for their 30 or 40 years of toil.

I, for one, will gladly starve when I'm old so long as I can smugly watch these undeserving fat-cat pensioners starve now!
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Old 12-01-2008, 08:44 PM   #22
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and Chicago mayor King Richard II
You mean Adolph the Second who wants to put in hundreds of more stop light cameras to enhance City coffers and use the Constitution for toilet paper?

Sieg Heil kids!

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Old 12-01-2008, 08:54 PM   #23
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Originally Posted by Grep View Post
I've been dismayed at the tone that I've recently observed in the media - and that I've also heard parroted by individuals - concerning pensions that are due to common workers, be they automotive or State, etc.

Pensions, however much in decline, are a moral and/or legal obligation of employers. They are not a scam. They have long been a vehicle by which employers could attract and retain employees.

The salaries provided by my own employer have for far too many years been severely curtailed relative to both inflation and our peers. Yet employees remain loyal, in part due to their modest stake in the pension system. This benefits everyone.

Recently, the media (quite possibly goaded by lobbyists) has more and more frequently claimed that pensions are a significant reason why the big-three auto manufacturers in the U.S. aren't able to compete. In that context, a slyly-oblique suggestion is often made that these companies *should* enter bankruptcy, or at least threaten to, so as to in some way gain relief from this terrible burden.

Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats. In response, I say the following: If *I* don't have a pension, why should anyone else? Indeed, we can't compete and have pensions too! They are destroying our very way of life! Throw them overboard entirely or, if we must, dump them into government insurance programs where those tired old life-long slackers get the cut in benefits that they have always deserved for their 30 or 40 years of toil.

I, for one, will gladly starve when I'm old so long as I can smugly watch these undeserving fat-cat pensioners starve now!
nothing against defined benefit pensions but when people are getting $100,000 a year pensions after retiring before they hit 50 because they didn't take any vacation the last 2-3 years to raise their income and the company is going bankrupt or the local government is raising property taxes to insane levels then something is wrong
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Old 12-01-2008, 09:00 PM   #24
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I knew of the bankrupcy of Orange County in 1994, but did not follow up on how they recovered. But if my memory served me right, it was caused by a poor investment choice. They probably raised taxes and cut services to make ends meet.

The question related to this thread was about what happened to the pension plans that the county was liable for, because I also remember reading somewhere that public pensions are protected by the California Constitution. So, they can cut services and raise taxes, but cannot cut pensions.

But if the entire budget is consumed by pensions, as an ealier post pointing out about Austin budget projection, then what happens next? Would the state have to step in to help the county out? Then, the Federal bails out the state? But aren't Medicare and SS also projected to consume entire Fed budget?

It does not compute!!!

Just searching "Orange County pension bankrupcy", and I ran across several items about "Measure J", a proposition that was just passed by a 3-to-1 margin. This Measure J requires voter approval for all pension increases for Orange County elected officials and employees.
few years ago for a school paper i had to research public pensions and in the mid 1990's in california they increased pension benefits by double digit percentage rates in the name of attracting the best
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Old 12-01-2008, 09:15 PM   #25
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nothing against defined benefit pensions but when people are getting $100,000 a year pensions after retiring before they hit 50 because they didn't take any vacation the last 2-3 years to raise their income and the company is going bankrupt or the local government is raising property taxes to insane levels then something is wrong

Al, here is a well-meaning comment: It is a mark of respect for your readers to at least make an attempt at standard punctuation, capitalization and sentence structure. Your readers will appreciate the effort. Thanks.

The sort of pensions you speak of are rare to the point of being apocryphal. But that is not my argument. By the way, should I retire early, my pension would barely cover a cup of coffee.
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Old 12-01-2008, 09:35 PM   #26
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...
Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats ...
I've got to admit that not being a participant to any pension plan, I do not follow or study as to how public pensions are funded. I know a bit more about private pension plans, and of course some more about SS as that concerns me.

It may be true that politicians or unions have been promising and upping their constituent benefits in exchange for the votes. But same as with SS and Medicare, I suspect demographic changes are a big factor here. People simply live too long now.

Who do we blame? Or more importantly, what do we do?

I don't think SS will go away. Rather, I fully expect that it will be reduced, or taxed, or the eligibility age raised. I fully expect my standard of living to decline, and being LBYM'er, I have built in some margin by saving, living frugally, and rationing or curtailing my extraneous pleasures as needed. I hope it will be enough.

In another thread, Midpack asked how we could insulate our portfolio from the ravage of external destructive forces. Other forum members said it was not possible and I agreed. You can only minimize it, and take efforts to make your fate a little better than the next guy.

Demographic change is a big force. In another post, I point out that if we, as a nation, put our savings into blocks of gold, that does not save us either. How do we later convert the saved assets back to services that we need, like health care, or nursing homes? We need workers at the point that we need services, who must be paid with the assets that we have been saving. And if there are fewer workers than needed, it will cost more in assets to pay them.

What I am saying is that once we recover from this economic fiasco, labor provided by the fewer younger workers may be worth more than the assets that we retirees have been saving. Inflation, anybody?

That's my simple understanding, and again, I have prepared myself to a reduced standard of living. I hope to be pleasantly surprised.
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Old 12-01-2008, 09:38 PM   #27
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I could not access the full artical, but a couple of the comments were interesting:
Quote:
"If you are going to do an “Evil Wall Street” story at least get try to get your facts straight. The payments being made to the street by the State are due to the drop in the value of the equity benchmark being used to the fund, so they nothing more than the mark to market that every other equity investor is experiencing."

Quote:
"The Pennsylvania Pension funds (SERS for state employees and PSERS for school employees) use 8.5% as their estimate rate of return."

And if you think it's unusual for a pension fund to invest in a hedge fund, look at this from 2005......
Pension plans pouring billions into hedge funds - International Herald Tribune
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Old 12-02-2008, 07:47 AM   #28
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Al, here is a well-meaning comment: It is a mark of respect for your readers to at least make an attempt at standard punctuation, capitalization and sentence structure. Your readers will appreciate the effort. Thanks.

The sort of pensions you speak of are rare to the point of being apocryphal. But that is not my argument. By the way, should I retire early, my pension would barely cover a cup of coffee.
looks like the internet grammar police is out on patrol

if they were that rare than we wouldn't have california on the verge of bankruptcy along with NJ, GM and a lot of other large organizations. what the unions don't realize is that us younger folk can refuse to play with this craziness where half our property taxes go just to pay for pensions. we just move somewhere else
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Old 12-02-2008, 08:55 AM   #29
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Alarmingly, we may be entering a phase in our popular culture where pensions become the new bogeyman, and recipients the new undeserving fat-cats. In response, I say the following: If *I* don't have a pension, why should anyone else? Indeed, we can't compete and have pensions too! They are destroying our very way of life!
If a company wants to provide a pension, great for them. If a city or state government wants to provide it along with a total compensation package that doesn't significantly exceed "market value" -- and where they don't cause city and state budgets to swell out of control -- great.

What I will say is this: As more and more taxpayers without pensions are feeling squeezed financially, fearing for their job security and seeing their retirement destroyed by a 1/3 loss in their 401Ks and IRAs, their willingness to have more and more of their tax money go to shore up pensions they don't get will shrivel away. It's not so much a question about wanting to take pensions away as it is the fact that people are sick of rescuing everyone else and getting no relief themselves.

Want to bail out pensions and raise taxes to shore them up? Bail out my 401K and we'll talk. That's the attitude I'm seeing, not that no one else should have a pension.
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Old 12-02-2008, 09:24 AM   #30
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If a company wants to provide a pension, great for them. If a city or state government wants to provide it along with a total compensation package that doesn't significantly exceed "market value" -- and where they don't cause city and state budgets to swell out of control -- great.
I have no problem with that.

Quote:
What I will say is this: As more and more taxpayers without pensions are feeling squeezed financially, fearing for their job security and seeing their retirement destroyed by a 1/3 loss in their 401Ks and IRAs, their willingness to have more and more of their tax money go to shore up pensions they don't get will shrivel away. It's not so much a question about wanting to take pensions away as it is the fact that people are sick of rescuing everyone else and getting no relief themselves.
Sort of the famous phrase: "I don't care what you are getting as long as I am doing ok" mantra??

Quote:
Want to bail out pensions and raise taxes to shore them up? Bail out my 401K and we'll talk. That's the attitude I'm seeing, not that no one else should have a pension.
That won't happen, because the powers that be will point out that you had CHOICES in whether to participate or not, and HOW those funds are invested. They will say if you were afraid of loss, you should have changed your investment mix to protect yourself..........
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Old 12-02-2008, 09:43 AM   #31
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Austin firefighters recently turned down a new contract which would (among other things) INCREASE their pension even as most of us have watched our 401K plans go up in smoke and we watch municipal budgets strained to the hilt.

What planet are they on?
According to the Austin newspaper, the firefighters' union thought they had a good deal on salary issues, but the majority of the individual firefighters voted against the contract because the city wanted to change hiring standards. Apparently the city has a desired racial/ethnic/gender mixture they want the FD to have, but the current hiring and promotion standards are not allowing that to happen as quickly as they would like. Some said that the firefighters felt that this would result in a lowering of standards that would result in their working with unqualified people.

We faced similar issues in Houston in the past. The city could not manipulate testing to control the racial/gender makeup of the department or it's supervision, and before we had collective bargaining they could not get the state law changed, so they would promote as far down a list of eligibles as they could in order to get a minority. A lot of incompetent non-minorities got promoted in that process. We negotiated with the city to create a better system in one of our first contracts.
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I believe that Texas also has a separate pension fund for its police and firefighters that is not directly associated with Austin.
No - there is a state retirement system for municipal employees that a number of the smaller cities participate in, and some of the police and firefighters are included,but all of the big police agencies have their own systems. Plus, under the TMRS, each individual city can pick and choose from options in the TMRS and in effect has its own plan.
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Old 12-02-2008, 12:27 PM   #32
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nothing against defined benefit pensions but when people are getting $100,000 a year pensions after retiring before they hit 50 because they didn't take any vacation the last 2-3 years to raise their income and the company is going bankrupt or the local government is raising property taxes to insane levels then something is wrong
Please show proof of this happening. Stating it on an internet forum with no reference to a source, doesnt make it true.
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Old 12-02-2008, 12:32 PM   #33
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Please show proof of this happening. Stating it on an internet forum with no reference to a source, doesnt make it true.
Fat paychecks and pensions spell trouble - Jun. 3, 2008
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Old 12-02-2008, 12:49 PM   #34
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Sounds like there are some morons running that city, but still, its not exactly what Bundy said.
1. 1st of all, its not that amount of the pension that matters, its the percentage of their final salary. Some of them might be getting more than $100K in pension benefits but thats because they get paid so much while working, which they pretty much have to to be able to afford to live anywhere near that area. Trust me, I dont make anywhere near what the cops in that city make, but then I dont live in California. You cant exactly expect cops to make $60K per year and be able to afford to live there can you? i dont know how anyone can afford California.

2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.

3. Bundy said they were getting more than $100K before age 50. Didnt see any mention of that in the article. If they retire before age 50 they will take a large hit to their benefits.

4. Where does it mention that not taking any vacation in their last few years will raise their benefits?

These California cites going bankrupt has much more to do with the real estate bust than anything else. They did the same thing everyone else did. They set their budgets based on wildly inflated housing prices which gave them insane amounts of property taxes that were unrealstic. Once again, too much greed. Housing prices in Texas have always been and remain much more steady and the State is doing just fine.

Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.
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Old 12-02-2008, 12:54 PM   #35
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These California cites going bankrupt has much more to do with the real estate bust than anything else. They did the same thing everyone else did. They set their budgets based on wildly inflated housing prices which gave them insane amounts of property taxes that were unrealstic. Once again, too much greed.
They certainly did act like the gravy train would never derail. That was poor management, but there's also a lot of pressure on them to give away the farm when things are rosy. And often they decide to "buy labor peace" at City Hall with surplus funds.

And the problem is that once you give more away when times are good, it's pretty darned hard to take them back when they go bad. And that, in a nutshell, is where much of the problem is now. Many jurisdictions have made pie-in-the-sky promises based on unsustainable long-term assumptions.
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Old 12-02-2008, 01:02 PM   #36
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looks like the internet grammar police is out on patrol
Actually, Al, you may notice that I did not actually criticize you. I only made a suggestion. But don't worry, I won't bother again.

One of the reasons I enjoy coming to this forum is that the posters are generally quite thoughtful and write well. Maybe it's because many of them are from an earlier generation, back when writing was considered an important skill. Or maybe it's because only those who exhibit self-discipline can retire early, and that shows.

Curiously, I've noticed that those that write lazily or without concern for their readers seem mostly to hang out on the "Stock Picking" forum. I wonder what that means? :P

As far as pensions go, I live in an expensive area. The bedrock of the retirement plan of a number of people I know is their pensions. If they work 30+ years and retire at 60+, etc., many will receive a pension that is quite a high percentage of their final salary (say 75-85%). But they will need that to live, for if the pension goes down in flames, so will they.
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Old 12-02-2008, 01:04 PM   #37
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I agree with that but heres what gets me. As Ive stated many tiimes, my pension fund is not run but the city. They make a certain percentage contribution and thats as far as it goes. That contribution percentage hasnt been raised in over 25 years. The City makes no decisions about who gets what.

If the pension board decides to raise benefits, there is a vote and if passed, the new benefits take affect, but it doesnt cost the city another extra dime. The pension board has their own actuary experts and they know what we have and what benefits we can afford to pay out. The taxpayers arent on the hook for any bad decisions the board might make and they have no reason to complain when good decisions result in higher benefits for me. Its not costing them anything more at all. Why they dont all work that way is beyond me, but I know this.....you cant put a politician in charge of money without expecting a bad outcome.
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Old 12-02-2008, 01:58 PM   #38
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2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.
Cops, maybe. Firefighters, quite likely.

Quote:
4. Where does it mention that not taking any vacation in their last few years will raise their benefits?
I didn't see it either. However, in Milwaukee, there was a window where retiring folks could take their sick days, multiply them by a factor of 1.5, convert them to their hourly rate, and convert them into either a lump sum or enhance their pension rate. The city put the kabosh on that after a few of those stories hit the newspapers.......

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Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.
I guess I need to learn more. I always thought the amount that went to fund the pensions was set by a collective bargaining agreement with the labor unions of the govt workers. Then if the county or city or whatever couldn't make the payments, they would raise taxes to make up the difference. At least that's the way it works in Milwaukee County...........
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Old 12-02-2008, 02:10 PM   #39
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I guess I need to learn more. I always thought the amount that went to fund the pensions was set by a collective bargaining agreement with the labor unions of the govt workers. Then if the county or city or whatever couldn't make the payments, they would raise taxes to make up the difference. At least that's the way it works in Milwaukee County...........
That's the kicker that has some people outraged, IMO -- the part about coming back and raising taxes on everyone to make up for pension shortfalls -- not the existence of the pensions themselves.

Personally, I think the governmental employers should get out of the business of promising certain levels of pension benefits and instead negotiate a certain level of pension fund contribution -- to give to the union to manage. The unions can manage the fund and set the payouts together with whatever managers and actuaries they hire.

I believe that is similar to what GM recently worked out with the UAW with respect to retiree health insurance. My understanding is that GM will provide a certain negotiated level of funding, and it's up to the union to manage that money wisely and negotiate the health insurance package for retirees.

That might be a way employers (public and private) can continue to afford funding pensions. It's the market-based risk and the possibility for very large liabilities years down the road that are really the problem. If the pension contributions (like 401K company matches) are fixed and negotiated, the employer pays it out to the union, the future liabilities are zero -- pay as you go, no ticking time bomb. It's like a 401K match to the company, but paid into a pension fund controlled by the union for all the employees.

Alternatively, if employers (especially governmental employers who have the power to tax) stay in the business of providing guarantees about benefit levels regardless of market conditions, the assumptions about rates of return need to be a lot more conservative so there's no need for pension fund managers to go to Vegas with the money and then run to the taxpayers when it blows up. As I've written before, I think any assumptions about return that are higher than the reasonable long-term return of a 50/50 portfolio is too risky.
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Old 12-02-2008, 02:11 PM   #40
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I agree with that but heres what gets me. As Ive stated many tiimes, my pension fund is not run but the city. They make a certain percentage contribution and thats as far as it goes. That contribution percentage hasnt been raised in over 25 years. The City makes no decisions about who gets what.

If the pension board decides to raise benefits, there is a vote and if passed, the new benefits take affect, but it doesnt cost the city another extra dime. The pension board has their own actuary experts and they know what we have and what benefits we can afford to pay out. The taxpayers arent on the hook for any bad decisions the board might make and they have no reason to complain when good decisions result in higher benefits for me. Its not costing them anything more at all. Why they dont all work that way is beyond me, but I know this.....you cant put a politician in charge of money without expecting a bad outcome.
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Why are "politicians handing out heavily sweetend pensions" as stated in the article. If the pension fund were a seperate entity and not controlled by the government entity (as it should be), politicians wouldnt be in control and wouldnt be screwing the pensions funds up like they do everything else.
That's exactly how my public pension fund operates also. It's run by an elected board of trustees, all of whom are employees of participating public employers, or retirees of those same employers. I previously posted that they are a 50/50 mix of employer elected trustees and employee elected trustees....That was a slight error on my part. Actually, the participating public employer elects 4 trustees, the participating employees elect 4 trustees, AND the participating retirees elect 1 trustee. Those trustees are 100% responsible for our pension fund....NO politicians are allowed (by state statue) to have any control or jurisdiction over our fund. Because, as utrecht stated, "you cant put a politician in charge of money without expecting a bad outcome".

The proof's in the pudding....The IL State Employees public pension has been basically robbed by our idiot governor....not that he's taken money out of it, but rather he has refused to put money into it...money that, by law, is mandated to be put into it. Instead, he's blown that designated, appropriated money on his own whims and agenda. So not only has our economy taken a toll on State Employee pensions, but the governor has torpedoed the ship as well!

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2. To get the pensions mentioned, they have to work until they are 50 and have 30 years of service. How many cops do you think hire on as early as 20 years old AND work for 30 years? I'll bet its single digits.

3. Bundy said they were getting more than $100K before age 50. Didnt see any mention of that in the article. If they retire before age 50 they will take a large hit to their benefits.
The rules of our public pension fund for the full pension benefit, require that the employee be at least 55 years old AND have at least 35 years of service, OR be at least 62 years old and have at least 20 years of service. The only exception to that rule is if the participating employer officially offers an Early Retire Incentive (ERI) package as allowed by the pension fund rules. The ERI allows qualifying employees to "buy" up to 5 years of age/service credit....as I did in April '07. No one under 50 is eligible to do that...NO exceptions! The pension fund calculates how much the employee's contributions would amount to for the number of years being "bought", including projected pay raises and/or cost of living increases, and they send you a bill for that amount, due payable the day after you retire. I "bought" 5 years worth, as I was 50 years old, and had just over 30 years of service.....my cost was $10,000.

If you bailout before full qualifying age, your pension is drastically reduced, and you can't draw it until at least age 62!

In the history of our municipality, which has been a participating employer for over 50 years, only 3 employees have EVER qualified for that! That was myself and 2 co-workers...we were all hired before we turned 20 years old. Currently there is 1 employee that will qualify IF he stays there at least another 28 1/2 years!

Our police employees rarely stay with our department long enough to qualify for ER here....most move away to other areas, and other depts. for better wages/benefits. Many of the firefighters try to hang in there for ER...some make it...some don't....most have worked full term and retired at normal retirement age, because they liked their jobs....some have retired early (not a lot though) and gone onto new jobs/careers.
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