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Old 12-19-2008, 03:26 PM   #61
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Originally Posted by MGYog View Post
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?
Yes it does. I dont know all the details and have never really looked into it because I do know Im not eligible to draw much SS at all. I think Im maxed out at $200 / month or something like that. I dont think I would get anything except for the fact that I paid into SS when in the military and in other previous jobs.
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Old 12-19-2008, 03:34 PM   #62
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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?
Even though our pension fund is a "gov't" pension (covering tens of thousands of municipal, county, state, and school employees in IL), it's actually governed and operated independently by employee-, employer-, and retiree-elected trustees....not by gov't appointees or officials....thankfully!!! All participating employers, and their employees, are required to pay into SS also. That being the case, our pension is exempt from the WEP, so there's no decrease in benefits.
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Old 12-19-2008, 09:23 PM   #63
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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.

This is funny, Tex. I can imagine your co-worker asking a question and expecting an answer in 6 words or less...and there you go for TWO MINUTES talking about SWR, AA, etc., etc. I realized that people generally are not patient enough for an explanation...they just want the answer! I usually blow 'em off unless they are willing to invest some time.

I think TSP is better than "pretty good", mainly because the ER's are so low, and I agree FERS is one of th best 3-legged stools out there, and should be a model for others employers.
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Old 12-19-2008, 10:35 PM   #64
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This is funny, Tex. I can imagine your co-worker asking a question and expecting an answer in 6 words or less...and there you go for TWO MINUTES talking about SWR, AA, etc., etc. I realized that people generally are not patient enough for an explanation...they just want the answer! I usually blow 'em off unless they are willing to invest some time.
I had one of those questions about our company pension just before I retired in 2007. The question was from a 42 year old that had about 18 years service.

The question was. "How much of your final salary does our pension replace?" My answer was straight to the point and I got his attention. My reply, about 41%.

You should have seen his face, it was priceless.
Then he got a little po'd at the company.

"Why those cheap SOB's", was all he could say.

That gave me a perfect opportunity to fill him in on the value of the 401K plan and IRA's. Then I filled him in on the 4% SWR, which didn't really sink in until I told him for every $40K he wanted in income he'd need about a million $ in the bank. That got a "HOLY COW" out of him. Not really, it was a HOLY S***.

I think I won a convert that day, we'll know in about 15 years or so. Ya gotta get the young kids attention first and then lay on the heavy stuff.
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Old 12-20-2008, 07:04 PM   #65
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NY has the same problem with the impending public pension timebomb. Unfortunately, downstate NY has hundreds of taxing authorities, each with their own employees feeding off the state retirement system. We also get lots of cute extras, including:

The local commuter railroad has an organized scheme for retirees to become disabled at the time of retirement, making them eligible for higher payout rates. For the past few years, 100% of retirees have been disabled.

Consultants for local governments and school districts get themselves on the public pension plan, despite working for private firms.

It is not uncommon for someone such as a highway commisioner to "retire", drawing a pension and go back to the same job the next day for the same salary. This is always explained that he was the most qualified for the job.

These are only a few of the infuriating practices that lead those of us with only DC contributions to say screw you to those who insiste on better DB pensions. Using my tax dollars to bail out GM's retirement plan only makes it worse.
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Old 12-21-2008, 12:24 AM   #66
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It is not uncommon for someone such as a highway commisioner to "retire", drawing a pension and go back to the same job the next day for the same salary. This is always explained that he was the most qualified for the job.
One of the nice things (IMHO) about our pension plan....If you retire under their Early Retirement Incentive (ERI) as I did, and you go back to work for ANY employer that participates in our pension plan, you're pension is IMMEDIATELY terminated, AND you have to pay back every penny that you received in pension payments. You are then also barred from ever participating in another ERI. You are still able to retire at full retirement age, and receive the appropriate amount of pension, but there's no way possible to draw a pension from them, and to also work for a participating employer. They made sure that all of the loop-holes and/or work-arounds were eliminated.

The only exception to the rule, is if you are elected to a public office. In that case your pension payments will continue as normal. However, as an elected official, you will not be allowed to participate in the pension plan in that position. IOW, you cannot start paying into the pension plan again while you're holding that office, and therefore you're not able to increase your pension payments in any way.

And I say that it's 'one of the nice things', in that it reinforces the fact that I won't go back to work!
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Old 12-21-2008, 07:59 AM   #67
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One of the nice things (IMHO) about our pension plan....If you retire under their Early Retirement Incentive (ERI) as I did, and you go back to work for ANY employer that participates in our pension plan, you're pension is IMMEDIATELY terminated, AND you have to pay back every penny that you received in pension payments. You are then also barred from ever participating in another ERI. You are still able to retire at full retirement age, and receive the appropriate amount of pension, but there's no way possible to draw a pension from them, and to also work for a participating employer. They made sure that all of the loop-holes and/or work-arounds were eliminated.
This is one of the more common loopholes I'm aware of: retire early with a pension and retiree health insurance, then immediately hire back in as a contractor/consultant for double the hourly wage.

I used to work for a large aerospace company, and this was really common -- plus, many of them were also retired military, collecting two pensions, getting health insurance and $80-100 per hour as a contractor.

Nice gig.
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Old 12-21-2008, 08:10 AM   #68
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If they are paying other contractors $80-$100 per hour and have an opening for another one, then what difference does it make it they hire one from the outside, or they hire one of their own employees the day after he retires?

The company is paying the exact same amount of money.

The guy retires so they owe him his pension. They have to pay it no matter where he retires to.

They need a contract employee. They have to pay one no matter who it is.

Why cant it be the same person? There is no monetary difference to the company, but they get to hire a person that they already knows how to to a good job and arent taking a chance on some random person. Sounds like a win / win to me.

It would only be a loophole if the guy continued to accrue retirements benefits while working as a contractor and it doesnt sound like that would be possible.
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Old 12-21-2008, 09:03 AM   #69
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If they are paying other contractors $80-$100 per hour and have an opening for another one, then what difference does it make it they hire one from the outside, or they hire one of their own employees the day after he retires?

The company is paying the exact same amount of money.

The guy retires so they owe him his pension. They have to pay it no matter where he retires to.

They need a contract employee. They have to pay one no matter who it is.

Why cant it be the same person? There is no monetary difference to the company, but they get to hire a person that they already knows how to to a good job and arent taking a chance on some random person. Sounds like a win / win to me.

It would only be a loophole if the guy continued to accrue retirements benefits while working as a contractor and it doesnt sound like that would be possible.
Some companies abuse the system and force people into early retirement so they can collect benefits and then hire them back as a contractor. The take-home pay may be the same but the company saves in not having to pay any benefits like 401K matching funds, pension benefits, and healthcare.

At my Megacorp it is now a standing policy if you retire before FRA (65) they will not rehire you till you turn 65. They wanted no part of appearing to force someone into early retirement just to lower their costs. The customer got billed by the worker's job classification, not what they took home so the company stood to make more money by hiring contractors.
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Old 12-21-2008, 09:06 AM   #70
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Some companies abuse the system and force people into early retirement so they can collect benefits and then hire them back as a contractor. The take-home pay may be the same but the company saves in not having to pay any benefits like 401K matching funds, pension benefits, and healthcare.
I've been at a Megacorp which has laid people off (or gave them early retirement incentives) and immediately rehired them as contractors. Seems kind of silly, I think, but it seems like an accounting shell game.

I don't understand how the math works, but I guess they prefer the cost-certainty of paying more upfront with no benefits than paying less now and be potentially stuck with indeterminate pension and health care liabilities.
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Old 12-21-2008, 09:20 AM   #71
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I've been at a Megacorp which has laid people off (or gave them early retirement incentives) and immediately rehired them as contractors. Seems kind of silly, I think, but it seems like an accounting shell game.

I don't understand how the math works, but I guess they prefer the cost-certainty of paying more upfront with no benefits than paying less now and be potentially stuck with indeterminate pension and health care liabilities.
It sure could be a shell game. When I retired my gross take-home pay was close to $50/hour. To cover all my benefits and make a profit the company charged the customer almost $150/hour. The math gets easy for the bean counters when the rehired employee's benefits come out of the pension fund. Plus they don't have to pay for vacation and sick leave.
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Old 12-21-2008, 10:17 AM   #72
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Now Im really confused. Ziggy, in this thread and others, youve been very critical of company pensions saying that taxpayers cant afford them.

You said workers were retiring and then coming back right away as a contractor and said it was a nice gig implying that they were cheating the system somehow.

Now youre saying with this "shell game" scenario, the company is doing it to save money. If they are saving money and the worker is getting a good deal also, then whats the problem?

Maybe the customer is getting the raw end of the deal, but thats not what youve been complaining about in reagrds to pensions for the past month or so.....and besides, the customer can go elsewhere with their business anytime they want.
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Old 12-21-2008, 10:20 AM   #73
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Now Im really confused. Ziggy, in this thread and others, youve been very critical of company pensions saying that taxpayers cant afford them.
No -- I'm critical of public pensions that way overpromise, are too generous AND require additional taxpayer help when they are underfunded. That is certainly not the universe of pensions, and certainly not the well-run ones -- to say nothing of corporate pensions.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
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