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Old 12-02-2008, 02:27 PM   #41
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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.
You'd have to destroy a few powerful unions to do that, like the teacher's union........

FWIW, I have yet to meet ONE person involved in the pension process from local govt or anywhere that knows anything substantial about the plan they have........
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Old 12-02-2008, 02:30 PM   #42
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You'd have to destroy a few powerful unions to do that, like the teacher's union........
Hey, I never said it was feasible, and I'm sure many public employees unions would consider this DOA. But I do think it -- or MUCH more realistic expectations about future returns on pension funds -- are the only way to keep public pensions affordable and feasible indefinitely.

If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. Better than the whole thing blowing up or expecting a taxpayer bailout.
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Old 12-02-2008, 02:36 PM   #43
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Hey, I never said it was feasible, and I'm sure many public employees unions would consider this DOA. But I do think it -- or MUCH more realistic expectations about future returns on pension funds -- are the only way to keep public pensions affordable and feasible indefinitely.

If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. Better than the whole thing blowing up or expecting a taxpayer bailout.
Well, to agree to 60%, the unions would want a 30% increase in pay. That won't happen, either. FWIW, starting kindergarten teachers in my school district make $42K plus benefits. To me, that seems like a fair wage for 4 years of school plus one year of student teaching
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Old 12-02-2008, 02:43 PM   #44
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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.
The amount that is paid into our public pension fund is 100% controlled and set by the fund's elected trustees. It is a flat percentage of the employee's gross pay....the employee pays (IIRC) 4.5% of his/her gross pay, and the employer pays ~7% of the employee's gross pay. The percentages haven't been raised in about 30 years!

The union's only hand in the matter, is bargaining for actual employee wages and benefits....they have NO say whatsoever about pension funding, nor does the employer. The only say that either the employers or the employees, or for that matter the retirees, have is through the 9 trustees the were elected by the employers (4), the employees (4), and the retirees (1). And since each of the 9 trustees are all active participants in the plan themselves, they're going to be looking out for the best interests of their respective groups....since all of their decisions have a direct impact on each of them also.
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Old 12-02-2008, 03:33 PM   #45
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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.
This is exactly how my pension fund operates (and apparently how Goonies does also). It sounds like Goonies' fund is very strong and mine certainly is, so obviously public pension funds CAN operate efficiently and without causing undue burden on the government agency or the taxpayers. My point is that public pensions themselves are NOT the source of any problems. The source of the problems is constant govenment mismanagment. In this case, mismanagment of their pension funds. They could take away the public pensions in those troubled cities and the politicians would still run the city into the ground in other ways. The solution has nothing to do with doing away with public pensions. The solution is to get rid of the morons in office that dont know what they are doing. Why not do a study of public pensions that are working around the country and copy them?

Why on earth would the unions be upset if they had a pension fund run by people who know what they are doing? I can promise you their benefits would be higher and more secure than they are now.
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Old 12-02-2008, 04:29 PM   #46
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....
If using more conservative assumptions means you can only promise new hires 60% of pay after 30 years instead of 80%, so be it. ...
I'm wondering how much you actually know about govt pensions.

A federal employee (FERS - hired after 1984) after 30 years earns - guess what, 30% (1% per year) - granted that's based on high-three salary & includes a "diet" COLA (CPI minus 1%) - oh, & that pension is also permanently reduced by 5% per year for every year you are under 62 -

So lets say you start as a federal worker at 25 y/o & early-retire at 55 at a high-3 salary of 60k you get 20,000 pension minus 35% (age reduction) = $13000. year pension annuity.

Of course since you've been paying into Social Security all these years you will be eligible for SS at 62 - & guess what, your FERS pension is going to also give you what's called a Special Retirement Supplement (SRS) till age 62 when you can apply for Social Security. Since you worked as a fed for 30 years you get 75% (30/40) of what your SS benefit will be at 62. So lets say that age 62 SS benefit is $15000 a year then your SRS will be an additional $11250 not COLA'D & reduced by $1 for every $2 earned income you have while retired - NOTE: (the SRS stops at age 62 whether you elect to take reduced SS early or wait)

So now your retirement benefit is:
$13000 pension
$11250 SRS (assuming you don't work at all after retirement)
$24250

So it seems that 30 years on the job earns you a fat federal pension of about 40% of your high three (if you don't work after retirement) - & you pretty much will have to take your SS early at age 62 cause you'll suffer nearly a 40% reduction in your pension if you want to wait till 67 (your SRS goes away at age 62)

(plus whatever you've saved in your TSP for 30 years +5% employer match - much like any other large employers 401k & subject to bad years just like anyone elses 401k)

I'm not complaining about my retirement benefit personally, I'm under fed Law Enforcement retirement which is a bit better, but just want to set the record straight, cause I don't know where you get that 80% for 30 years (I'll take that 80% for-life any day & you can have my whole TSP to boot!)

(Oh, and that thing some people think about federal pensions being tax-free is a myth, it's taxable like anybody else's)
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Old 12-02-2008, 04:53 PM   #47
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I'm wondering how much you actually know about govt pensions.

A federal employee (FERS - hired after 1984) after 30 years earns - guess what, 30% (1% per year) - granted that's based on high-three salary & includes a "diet" COLA (CPI - 1%) - oh, & that pension is also reduced by 5% per year for every year you are under 62 -
Actually, for the most part, federal pensions aren't a ticking time bomb and I haven't really been referring to federal pensions. It's mostly state and local pension plans that overpromise. I think the feds did a pretty good job of sensible pension reform a while back that balances decent benefits for federal workers without the potential for runaway costs that can't be managed effectively.
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Old 12-02-2008, 05:13 PM   #48
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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
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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.

.....
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looks like the internet grammar police is out on patrol ....
Don't worry Al, I understood every word you wrote. I don't get too wound up about punctuation on an internet forum either.

Here's a little something that was e-mailed to me a while back (allegedly from Cambridge University ):

Olny srmat poelpe can raed tihs.
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm.
Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt! if you can raed tihs psas it on !!



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Old 12-02-2008, 05:14 PM   #49
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.... I think the feds did a pretty good job of sensible pension reform a while back that balances decent benefits for federal workers without the potential for runaway costs that can't be managed effectively.
You can thank Ronald Reagan for that.
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Old 12-02-2008, 06:16 PM   #50
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The amount that is paid into our public pension fund is 100% controlled and set by the fund's elected trustees. It is a flat percentage of the employee's gross pay....the employee pays (IIRC) 4.5% of his/her gross pay, and the employer pays ~7% of the employee's gross pay. The percentages haven't been raised in about 30 years!

The union's only hand in the matter, is bargaining for actual employee wages and benefits....they have NO say whatsoever about pension funding, nor does the employer. The only say that either the employers or the employees, or for that matter the retirees, have is through the 9 trustees the were elected by the employers (4), the employees (4), and the retirees (1). And since each of the 9 trustees are all active participants in the plan themselves, they're going to be looking out for the best interests of their respective groups....since all of their decisions have a direct impact on each of them also.
Ours is similar, but it wasn't always that way. Before we had meet and confer, the city and the pension fund agreed on what the fund could afford to do and the auditors had to bless it. But after meet and confer the city only met with the union as the MBA and their decisions on salary had an impact on the pension. When the city started trying to push current expenses off into the future by piling it all into areas that impacted future pensions, the pension fund was negatively impacted and fell below 100% funded. The union acquiesced because all they saw were benefits to their members. The pension board started screaming because they saw benefits to their members that were actuarially unsound. They finally filed a lawsuit against the city - all of which was settled when a new administration came in and negotiated amendments to the contract with the pension board. Now, the city negotiates with both the MBA and the pension to make sure that they don't screw that up again.

It seems to be working well. The union and the city negotiate salary, work conditions, etc., and the pension board is there to say "we can pay for that", or "the only way we can pay for that is if you give us more money." Of course they had to modify or kill off a few programs that had created funding problems in the first place - but not before I snuck out the door with my money
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Old 12-02-2008, 08:08 PM   #51
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Don't worry Al, I understood every word you wrote. I don't get too wound up about punctuation on an internet forum either.

Here's a little something that was e-mailed to me a while back (allegedly from Cambridge University ):

Olny srmat poelpe can raed tihs.
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm.
Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt! if you can raed tihs psas it on !!



That is because it includes punctuation and capitals. Try again - why bother?

olny srmat poelpe can raed tihs i cdnuolt blveiee taht i cluod aulaclty uesdnatnrd waht i was rdanieg the phaonmneal pweor of the hmuan mnid aoccdrnig to a rscheearch at cmabrigde uinervtisy it deosn't mttaer in waht oredr the ltteers in a wrod are the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae the rset can be a taotl mses and you can sitll raed it wouthit a porbelm tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef but the wrod as a wlohe amzanig huh yaeh and i awlyas tghuhot slpeling was ipmorantt if you can raed tihs psas it on


-ERD50
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Old 12-02-2008, 10:05 PM   #52
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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.
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looks like the internet grammar police is out on patrol
Since Al can't tell the difference between a politely worded constructive criticism and being put "up against the wall" by the grammar police, I can't see any reason to accept any of his other claims to knowledge either. They are usually of the "this is going to happen in 3 days" genre anyway. And anyway, Grep, did you notice that he put a period in his next comment? You must have made an impression.

I have no real problem with different styles of writing. Crappy personalities are a completely different issue. Ignore.
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Old 12-02-2008, 10:26 PM   #53
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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.
I think I speak for nerds everywhere, in stating your capitalization of "grep" is equally annoying.
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Old 12-03-2008, 08:29 AM   #54
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Since Al can't tell the difference between a politely worded constructive criticism and being put "up against the wall" by the grammar police, I can't see any reason to accept any of his other claims to knowledge either.
I'm getting that feeling also.

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Old 12-19-2008, 05:54 AM   #55
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Actually, for the most part, federal pensions aren't a ticking time bomb and I haven't really been referring to federal pensions. It's mostly state and local pension plans that overpromise. I think the feds did a pretty good job of sensible pension reform a while back that balances decent benefits for federal workers without the potential for runaway costs that can't be managed effectively.
+1
The pension plan that TexArkandy described seems like a reasonable compromise between security and affordability. My BIL recently retired after about 20+ years as a DOD contractor at 65 and his pension is in that range.
I also like that the Fed have a great 401K-like plan (TSP), encourage people to use it, and educate them on it. Overall, moving all Americans to this model would be a step in the right direction. Pension, 401K, and Social Security = decent retirement add additional savings and a great retirement, no 401K and no saving= Spartan retirement.

But in general State and Local pensions are overly generous, underfunded, and poorly run, with way to many loopholes (vacations, OT, being rehired as contractors, pension banking etc). They allow civil servants to retire in their 50s or at the latest 62 with retirement salaries (including SS) that are equal to their work salaries. I have some sympathy for cops and fireman, but teachers, university Profs., DMV employees, judges etc. these aren't bad, or dangerous jobs. We taxpayers can't afford them.
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Old 12-19-2008, 12:12 PM   #56
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+1
.....
I also like that the Fed have a great 401K-like plan (TSP), encourage people to use it, and educate them on it. .....
I would have to agree that TSP is "pretty good" - (perhaps that's because there's no salesmen or much profit motive on the part of the TSP itself.)

Not that it couldn't stand for some improvement. There some folks over at TSPTalk forum who try to actively manage their TSP accounts for better returns who are quite unhappy with the Thrift Investment Board lately.

It never ceases to amaze me how many fed employees I see within 10 yrs of retirement eligibility who don't contribute heavily to TSP & only check their fund once every year or two to see how they're doing. (& have new cars & 25 years left on their mortgages)

Seems many just assume when retirement age comes their fed retirement income will be near the same as working. Sometimes I'm asked a question about the retirement formulas, calculations, etc. Often the askers' eyes start to glaze over after less than two minutes, and the subject gets changed to football or something.

You can't convince them that FERS isn't quite the same as their Dad's old CSRS plan.
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Old 12-19-2008, 12:57 PM   #57
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The 80% is possible under the older CSRS federal pension plan.
Also, FERS pensions are not reduced if you meet certain age or time in service restrictions. I think 30 years of service at any age results in no reduction of benefits.

Unfortunately for me, at 30 years of service I'll be 60, so it ain't exactly an early retirment!
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Old 12-19-2008, 01:38 PM   #58
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The 80% is possible under the older CSRS federal pension plan.
Also, FERS pensions are not reduced if you meet certain age or time in service restrictions. I think 30 years of service at any age results in no reduction of benefits.

Unfortunately for me, at 30 years of service I'll be 60, so it ain't exactly an early retirment!
I hope to be ER'd for 10 years at age 60 - with FERS no less.
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Old 12-19-2008, 01:38 PM   #59
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Unfortunately for me, at 30 years of service I'll be 60, so it ain't exactly an early retirment!
I feel it's safe to say it's a LOT earlier than it will be for the vast majority of people relying almost exclusively on 401Ks and IRAs.
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Old 12-19-2008, 01:50 PM   #60
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This is a question that Goonie or utrecht might answer. If you qualify for a local or county pension, and also SS, doesn't the Windfall Elimination Provision apply?
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