Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-28-2015, 08:47 AM   #21
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
My guess would be the "bird in the hand" option.
Time to count the blessings, and be happy that the pension is not funded by Chicago.

Here's the latest on the outlook for public employee pensions in the windy city.

City lawyers predict 'catastrophic outcome' if pension reform overturned | Chicago

Quote:
Chicago faces a $300 million deficit in 2016 with shortfalls continuing “for the forseeable future” — even before piling on $20 billion in pension liabilities that have saddled the city with the “worst credit rating of any major city other than Detroit.”

And if state legislation that saved two of four city employee pension funds is overturned, a “catastrophic outcome” awaits retirees and Chicago taxpayers alike triggered by “further downgrades.”
__________________

__________________
imoldernu 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 02-28-2015, 09:20 AM   #22
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by imoldernu View Post
My guess would be the "bird in the hand" option.
Time to count the blessings, and be happy that the pension is not funded by Chicago.

Here's the latest on the outlook for public employee pensions in the windy city.

City lawyers predict 'catastrophic outcome' if pension reform overturned | Chicago
Its a real concern, but there was also a lot of hype and scaremongering around public pensions in the wake of 2008. Right now my state pension funding ratio is on the way up. The whole state system (including teachers and local workers) had a 71% at the end of 2013. The separate state workers pension was probably closer to 75% or 80% funded. Market returns and recent pension reforms that changed how benefits are calculated and pushed back the retirement age should see the funding ratio over 80% in the next couple of years. Also 2/3rd of the contributions come directly from state employees wages and the the state has a plan to reach a 100% funding ratio in 2030. So while giving up a chunk of money to any organization to buy an annuity is tough I feel pretty confident in the commitment and ability of my state to meet their obligations. We have a strong union and a democratic legislature which also gives me some confidence.
__________________

__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 02-28-2015, 09:33 AM   #23
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: 6,337
Quote:
Originally Posted by nun View Post
Also 2/3rd of the contributions come directly from state employees wages....
Thanks for mentioning that. It is an often forgotten fact. Part of a pension payment is simply return of the employee's contributions and a return of the earnings on those contributions.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 02-28-2015, 10:09 AM   #24
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by Chuckanut View Post
Thanks for mentioning that. It is an often forgotten fact. Part of a pension payment is simply return of the employee's contributions and a return of the earnings on those contributions.
Yes, the number of public pensions that don't require contributions from the employees is very low today. My state has both a DC and DB plan and you can choose one or the other. When I stared working I chose the DC plan as I wanted the flexibility and the DB plan had a 10 year vesting schedule. The contributions were the same, 11% of salary and the state kicks in 5%. Strangely the state is now allowing people in the DC plan a one time buy opportunity to buy into the DB plan ie to switch horses in mid stream. As I was thinking of using some of my savings to buy an annuity I decided to accept the offer as the state's DB plan is far better than any annuity I could buy on the open market.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 02-28-2015, 10:30 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,384
Quote:
Originally Posted by Chuckanut View Post
Thanks for mentioning that. It is an often forgotten fact. Part of a pension payment is simply return of the employee's contributions and a return of the earnings on those contributions.

It is still stunning how little that is in the total scheme of things. Very few pension systems I know of have a 14.5% contribution rate of total yearly compensation (which includes health insurance premium) and a 14.5% match like my pension system. Despite the big contributions from both sides, the system is held together by the investment returns. 67 cents of each pension dollar received comes from investment returns, while the other 33 from the contributions.
When government pensions skip their required contributions it is easily seen the compounding damage done to it years down the road.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 02-28-2015, 10:54 AM   #26
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by Mulligan View Post
When government pensions skip their required contributions it is easily seen the compounding damage done to it years down the road.


Sent from my iPad using Tapatalk
Yes very true. My state obviously fully funded the DC side of things, but did not do the same for the DB pension option for a long time, relying on investment gains and creative accounting to plug the gaps. That has now changed with the 2012 pension reforms and the state is increasing it's annual contribution to catch up.
__________________

__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   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


Similar Threads
Thread Thread Starter Forum Replies Last Post
Affordable Healthcare Act and Medicaid Zantastic Health and Early Retirement 25 10-04-2013 04:05 PM
Conundrum psmalloy FIRE and Money 24 03-20-2005 07:51 AM
ER Conundrum John Galt Other topics 21 11-23-2004 09:36 AM

 

 
All times are GMT -6. The time now is 10:31 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.