Pension Funds - the next bail out.

[al_bundy]

The following numbers are for 50% survivor on defined benefit.

My husband works for a state government, will retire in Sept., and I just computed his retirement as a percent of high three. (This was easy as he has not received a raise in his last three years). His pension is 23% of his high three. His plan does have a 401k type account but he doesn't get a match. Prior to a couple of years ago, the state contributed $10/two weeks, now $0. The wage structure for jobs like his (Dept.Labor) in the state's private sector is about 20% above his in the same state for the same experience in similar occupations (hard to estimate). Not all states are equal. Of course, this is close to home, but it strikes me that he has earned it after a career with a state, retirement at 63 years of age, a hit on salary potential on the outside (if real - it was hard to estimate), no match (total over career worth less than $2000 right now), etc. His "big" medical benefit (not) becomes a Medicare advantage plan at 65.

I'm FERS. If I were to retire when he does (original plan), I would get 20% of high three. My 401k match 5%. According to data collected by my professional society, my current pay (including DC area locality) is under the NATIONAL average for my career path and years experience by 13%. Since DC locality is over 10%, it is probably much, much more for the locality.

Both get SS. But my point is that as far as the defined pension portion goes we, as a family, get a little over 20% with two government jobs and neither of us is retiring at a young age or with only a short stay.

I wonder if we can get the numbers for all state ordinary workers without inflation by high paid administrators and special category/high risk employees. Is this just a few states or most states? Also, when we talk about "responsible" plans, aren't we talking about plans that buy things the taxpayer pays? So if the plans owning risky investments would have been in the federal securities and state and municipal coffers anyway? The more a plan is conservative, the more it invests in government debt to be paid back by future workers.

the retirement check assumes your home is paid off and you have no expenses other than normal living expenses and an extra vacation or two

if you assume a dual government employee couple made $100,000 at retirement and a $20,000 a year retirement check plus SS then it's more than enough money to live very comfortably

 

[randyman65]

"if you assume a dual government employee couple made $100,000 at retirement and a $20,000 a year retirement check plus SS then it's more than enough money to live very comfortably"

We can assume a total income of $55k, which is reasonable. But property taxes in suburban areas can eat you alive (around here taxes on a modest home can easily exceed $7,000) and presciption medication can get enormously expensive.

But your assertion bears merit - you described "comfortable" in a manner with which I would agree, but which many Americans would not.

 

[jug]

I think it goes deeper than that.

Many (and I qualify this with a BIG not everyone) in the public sector have an entitlement mentality with regard to pensions - what are you going to do for me?

Most (and I qualify this with a BIG not everyone) in the public sector have an entrepreunerial mentality with regard to pensions - what am I going to do for myself?

I believe a "share the pain" program should apply to public pensions that are underfunded and/or have lost money in the recent downturn. Those that were properly funded and administered should have no worries.

And, regarding the discussions around a disparity in benefits, how many retired public service employees are getting ZERO health care benefits? What would the equivalant percentage be in the private sector?

It's simple, many years ago I joined the public sector, to get away from the private sector. There was no way I was going to have my future determined by some jerk in a white shirt who has a pissy day and decides to lay me off.

I didn't even look at my pension plan. But as years went on, those in private sector were looking down at me as a chump. I said to myself, ok, I'm piddling along but will collect a pension and at least keep the wolves off of my back. It was a contract that I essentially made with the state I worked for, I stick around a number of years, I take a lower salary, they pay me a pension and health benies at the end. The salary was below what I could have made had I took my chances with the white shirt idiots. Eventually the salary got better, woohooo.

Well here we are, the contract is due, I'm retired, collecting a pension keeping the wolves off of my back, got some health benies, and the rest is history.

I had no intention of working for the man for so many years at the whim of the man. So I grabbed stability over potential upgrade in lifestyle, whatever that means.

jug

 

[Tadpole]

the retirement check assumes your home is paid off and you have no expenses other than normal living expenses and an extra vacation or two

if you assume a dual government employee couple made $100,000 at retirement and a $20,000 a year retirement check plus SS then it's more than enough money to live very comfortably

Well yes. It is really a matter of my personality, I suppose. My husband's pension is not COLA-ed and mine looses 1% per year to inflation. I don't trust the government to continue either or SS at the current agreement. My savings are enough to make up for the lost value of the pensions over the years. I have saved up a lot because my husband's family typical life expectancy is in the mid nineties. I hope I have saved enough on top of the inflation to adjust to any reductions he receives in pensions and/or SS. I worry it is not enough if big reductions/changes are made in medical benefits and/or Medicare. Medicare D really scared me because I, myself, considered it a stupid solution. But, then too, I consider a lot done by governments to be stupid so I might be biased.

So, I am just paranoid by nature and don't want to see my husband suffer at age 100 when I'm not there. Right now I am so concerned about a period of high inflation I am considering just working on and making the Post fire department carry me out. I like my job; it just gets in the way of the other things I like to do. (I like the paycheck too.)

In short, I am a coward compared to you guys.

 

[jdw_fire]

The last portion - the DB - is funded not by her own contributions but by taxpayer dollars.

sooo not true, there is both an employee contribution and an employing agency contribution to a federal pension fund which pays for the DB portion of the FERS (as well as the CSRS) retirement.

 

[randyman65]

Is the employee contribution 100%? then the remainder is taxpayer - i.e. employer - contribution.

 

[jdw_fire]

Is the employee contribution 100%? then the remainder is taxpayer - i.e. employer - contribution.

but just as with any employer that makes a contribution to a pension fund for their employee it is a part of their employee's pay package. the way u talk u imply that the tax payers r directly paying the pensions of federal retirees which is not true. btw the federal pension fund is in pretty good shape but when necessary the gov raises the required contributions (both employee and agency) to keep it that way.

 

[ziggy29]

Is the employee contribution 100%? then the remainder is taxpayer - i.e. employer - contribution.

But the question would still remain: does that contribution, when added to the total compensation, bring it in line with the private sector or jacking it higher? Frankly I have no issue with taxpayer contributions to a pension fund as long as it's considered part of the overall compensation which brings the total compensation package "in line" with the private sector.

What I resent is that many of these poorly run funds which overpromised and took too much risk will probably be bailed out with more of my tax money while the burning wreckage of my 401K will be allowed to rot.

 

[HFWR]

btw the federal pension fund is in pretty good shape but when necessary the gov raises the required contributions (both employee and agency) to keep it that way.

What a novel idea...

 

[atlas888]

Retirement plans of millions of Britons at risk after Bank of England 'prints money' - Telegraph

The risk to pension plans is only a Limey oddity, right?