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Old 07-26-2013, 10:11 AM   #41
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The only article on this I've seen lately is this one Just how generous are Detroit's worker pensions for retirees? - Jul. 23, 2013
Good article, thanks. Some points brought out indicate they have other benefits that go along with their pensions:

"Since Detroit's firefighters and police offers are able to retire a decade (or more) before they reach the typical retirement age of 65, retirees can receive their benefits for decades. In addition, many retired officers have time to pursue other careers and accumulate additional savings.

In addition to a lifetime of payouts, city workers also receive retiree healthcare, a benefit that is rarely offered by private sector employers.

They can also extend their pension benefits to a spouse after they die by opting for smaller monthly pension checks, said Don Taylor, president of the Retired Detroit Police and Firefighters Association. The amount the payments are reduced by depends on the spouse's age"
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Old 07-26-2013, 10:46 AM   #42
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Why that question? He didn't say, nor imply, that it was the 'norm'.

I saw it simply as a response to the earlier comment (underline mine) "I've never heard of a pension which provides 80% of a person's salary". So he gave some examples. Apparently, they exist, but that in no way indicates they are the norm.
My observations indicate that these type of super great public pensions are ususally reserved for police officers, firemen, and other public safety personnel. Connie Office Clerk, Amy Accountant, and Edward Engineer rarely get such deals.

Nor do they get deals similar to the ones from MegaCorp: My retiree medical benefit - good deal?
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Old 07-26-2013, 12:10 PM   #43
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My observations indicate that these type of super great public pensions are ususally reserved for police officers, firemen, and other public safety personnel. Connie Office Clerk, Amy Accountant, and Edward Engineer rarely get such deals.

Nor do they get deals similar to the ones from MegaCorp: My retiree medical benefit - good deal?
There's a reason for that. People expect cops to be counselors, paramedics, lawyers, social workers, protectors, and baby sitters. They expect us to being compassionate on one call ten minutes after seeing a guys head blown off on the previous call. They expect us to be brave and run towards danger, then they want to sue us when we have to shoot someone. They want us to be tough on crime and keep them safe but they video record everything we do and if a cop slips up in the heat of the moment hes all over CNN and his career is over. We are expected to perform at 100% capacity in 100 degree heat wearing a ballistic vest. They want us to catch bad guys but if we wreck a car during a pursuit we can get fired. If Edward Engineer gets a DWI, he gets probation and pays a fine. If a cop gets one he gets fired and he will never be hired in that field ever again. I could go on and on, but the point is that cops do what 99% of the rest of America doesn't want to do and doesn't want to see. We see the worst of society and are expected to handle it with no after affects and come out the other side just like we came in. When Connie Office Clerk can do all of that for 25+ years, she will deserve a healthy pension also.
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Old 07-26-2013, 12:26 PM   #44
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There's a reason for that. ....
I don't think anyone was looking for a justification/critique of any particular pension. Those discussions usually don't last long before porky ends it all anyway.

The question was - do they (pensions at the commented level) exist? And they do, and they will either need to be paid for, or promises broken, or some combo.

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Old 07-26-2013, 12:35 PM   #45
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There's a reason for that. People expect cops to be counselors, paramedics, lawyers, social workers, protectors, and baby sitters. They expect us to being compassionate on one call ten minutes after seeing a guys head blown off on the previous call. They expect us to be brave and run towards danger, then they want to sue us when we have to shoot someone. They want us to be tough on crime and keep them safe but they video record everything we do and if a cop slips up in the heat of the moment hes all over CNN and his career is over. We are expected to perform at 100% capacity in 100 degree heat wearing a ballistic vest. They want us to catch bad guys but if we wreck a car during a pursuit we can get fired. If Edward Engineer gets a DWI, he gets probation and pays a fine. If a cop gets one he gets fired and he will never be hired in that field ever again. I could go on and on, but the point is that cops do what 99% of the rest of America doesn't want to do and doesn't want to see. We see the worst of society and are expected to handle it with no after affects and come out the other side just like we came in. When Connie Office Clerk can do all of that for 25+ years, she will deserve a healthy pension also.
Utrecht, like ERD said, I don't think there is any criticism for the public servants getting their deserved pension. The question is (and your system appears to not be part of the question) is the math and accounting backing up the promises to pay the pension. As long as the math is behind it and money is there, it is not a problem. Some already weakened pension systems may be susceptible to people spiking their salaries that blows up the actuary assumptions of the system. My pension system a few years ago put in a provision to modify that potential problem. Any salary above 10% of previous years salary during final 3 years is not considered part of your salary for pension purposes.
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Old 07-26-2013, 12:44 PM   #46
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A self-contained and well-maintained pension like utrecht's is beyond reproach.

What people read about the most are cases from California. It involves pays and pensions for some city managers, prison psychiatrists, etc..., not just public safety personnel.

The abuses eat into the fund for other public workers, and now there's talk about the tax payers coughing up more. That makes pensioners with other plans defensive, but they should not be.
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Old 07-26-2013, 12:46 PM   #47
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My observations indicate that these type of super great public pensions are ususally reserved for police officers, firemen, and other public safety personnel. Connie Office Clerk, Amy Accountant, and Edward Engineer rarely get such deals.
The University of California Retirement Plan (UCRP) is one of the largest retirement plans in the country. It has employees in essentially all occupations.

UC employees retiring at age 60 receives 2.5% of salary times years of service (salary is typically the average of the last 3 years of employment). So a person who begins employment at age 30 and works for 30 years until age 60 receives 75% of their salary. A person with 40 years of service receives 100% of their salary (the maximum).

UC employees can retire early beginning at age 50. At age 50, they receive 1.1% of salary times years of service.

Unused sick leave adds to service credit. This is roughly one additional year for every 20 years of employment for people who are never sick, such as myself.

The UC pension has a COLA, although not a full COLA. Historically, the pension loses an average of about 1.25% to inflation every year, or about 1/2 of it's real value over 50 years.

In addition, UC offers a 403b and 457, although there is no employer match. Still, age 50+ employees can contribute $46K/yr tax free to these accounts. In addition, they can make $33.5K in after tax contributions and immediately roll these funds over to a Roth using the backdoor approach.

Retirees receive medical/dental benefits (e.g., retirees with 20 or more years of service pay 20% of health insurance premiums, and nothing for dental coverage). However, these benefits are not part of the vested pension and are not guaranteed.

From about 1990 until a few years ago, the UC pension plan was so well funded (certainly not a ponzi scheme) that there were no employer or employee contributions. However, such contributions resumed a few years ago.

UC is in the process of making some changes to its defined benefit pension plan (e.g., full retirement at age 65 instead of 60).

My defined benefit pension, which is now private, is loosely tied to the UC retirement system (e.g., same age factors and payout formulas). My pension plan on a whole is about 150% funded. In fact, until last year, I never made any employee contribution in 22 years of employment. I now contribute 7% to the defined benefit plan. I have very little concern about the plan going bankrupt, although PBGC would step in if it did.

My only significant concern deals with very high inflation. While my plan has a COLA, like UC, it is only a partial COLA. I will be fine if inflation is similar to historical results (including bouts of 1970's high inflation). However, my pension could be devastated by long periods of very high inflation (e.g., 10 years of > 20% inflation). I am considering adjusting my regular investment portfolio to act as a hedge against this possibility.
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Old 07-26-2013, 12:48 PM   #48
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I don't think anyone was looking for a justification/critique of any particular pension. Those discussions usually don't last long before porky ends it all anyway.

The question was - do they (pensions at the commented level) exist? And they do, and they will either need to be paid for, or promises broken, or some combo.

-ERD50
They do exist. My pension plan pays 3% times years worked times highest 3 years. So 27 years would get you more than 80%. However, due to the very high combined contribution percentage the pension fund can afford to pay that much in benefits. No overtime, no spiking or any of that other funny business. It is COLA'd but we get 4% of the original amount each year, so each year the COLA percentage decreases. The City probably contributes as much or more than any other City in the country, but they also pay us less than most all of the surrounding cities pay their officers so total compensation is in line with other local cities. The younger guys don't like getting paid less and a lot of them leave after a few years, but they will regret it 20 years from now.

The non public service city employees do have a separate pension fund. Contributions by both sides are much lower. Benefits are also much lower. The money is controlled and managed by the City and what do you know? Its mismanaged and underfunded.
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Old 07-26-2013, 12:54 PM   #49
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Here in Illinois these legislators and unions have to come to some agreement on pension reform. I'm willing to take a hair cut as long as it is fair and all the parties are involved including big business.
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Old 07-26-2013, 12:57 PM   #50
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The pension plan described by Shawn looks very generous. Still, if a system is self-contained, it's nobody's business to envy or to criticize it.

If a pension runs a surplus, the tax payer does not get to share. So, if a pension runs short, the tax payer should not have to bail it out. It's that simple.

Nobody is going to bail me out if I draw 10% WR from my portfolio and deplete it. Well, I guess there is. It's called food stamp and Medicaid.
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Old 07-26-2013, 01:19 PM   #51
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The pension plan described by Shawn looks very generous. Still, if a system is self-contained, it's nobody's business to envy or to criticize it.

Nobody is going to bail me out if I draw 10% WR from my portfolio and deplete it. Well, I guess there is. It's called food stamp and Medicaid.
Yes, that is quite a nice pension program (Shawn's). No wonder university costs have risen to the stratosphere over the last decade or so. (but that's a topic for another thread)

I don't have a pension and have to rely on my own contributions, with, of course, no bail out provisions. If we don't make it on our own, the only other alternative is to move in with the kids.

If I had it to do over again, I would have made my career a government employee or a professor in a university system.
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Old 07-26-2013, 01:33 PM   #52
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My sister teaches at the local state university. I do not envy her pay, but of course we are not in California.

Still, my children's tuitions were so high at that university, compared to what I myself had to pay 30+ years ago. And many classes were even online. Good lord, what does the money go for? Not all of it goes to the profs and instructors, I can tell you. They have horrendous admin and overhead now. What do they do, I have no idea. I guess it's the same as at one megacorp I have worked, where they had more bean counters than engineers.

Sorry for the diversion...
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Old 07-26-2013, 02:38 PM   #53
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Still, my children's tuitions were so high at that university, compared to what I myself had to pay 30+ years ago. And many classes were even online. Good lord, what does the money go for? Not all of it goes to the profs and instructors, I can tell you. They have horrendous admin and overhead now. What do they do, I have no idea. I guess it's the same as at one megacorp I have worked, where they had more bean counters than engineers.

Sorry for the diversion...
+1

This would make quite a good conversation in itself. I know several people who have taught at community colleges and the local BIG university. The administrators routinely make high five figures going into six figures, while the teaching staff are lucky to get $60,000 a year. And do that only if they have many years of teaching and take on extra courses.
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Old 07-26-2013, 05:30 PM   #54
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Here in Illinois these legislators and unions have to come to some agreement on pension reform.
Actually, the unions don't get a vote. They can whine and pout and wave signs and sing songs and all that. But, in the end, the legislators are 100% responsible for the outcome.
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I'm willing to take a hair cut as long as it is fair
I wonder who will define what "fair" is? If we had a philosopher king in charge of that decision, the tax payers would get hit for a modest portion of the funding that was skipped during the "pension holiday" years, retirees who "worked the system" and spiked or received other special treatment would get a haircut and your long retired 3rd grade teacher who has a modest pension, no SS and always paid for school supplies out of her own purse would be left unmolested. Current and future employees would be part of SS and have some "instant vesting" system, such as a 401k plan, where politicians cannot renege on promises after the years are already worked. But, it'll never work that way. The folks that got the most will keep the most. The folks who gave the most will get the least. Current and future employees will think that whatever benefits they thought they were working for in past years cannot be taken away while the politicians are simply waiting for the right time to do so. And the politicians will continue to point at everyone other than themselves as being to blame while hauling their own loot away.

It's Illinois!
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Old 07-26-2013, 05:57 PM   #55
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The only article on this I've seen lately is this one Just how generous are Detroit's worker pensions for retirees? - Jul. 23, 2013
Thanks for posting that, Timo. Very interesting to see the averages. If the combined (employee and employer) contributions are in the 29 to 36 percentage range as mentioned in this thread, those are reasonable amounts (i.e., the SS combined contribution is what, 13 percent? and is maybe $25K? at FRA).
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Old 07-26-2013, 06:23 PM   #56
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...If we had a philosopher king in charge of that decision, the tax payers would get hit for a modest portion of the funding that was skipped during the "pension holiday" years, retirees who "worked the system" and spiked or received other special treatment would get a haircut and your long retired 3rd grade teacher who has a modest pension, no SS and always paid for school supplies out of her own purse would be left unmolested...

It's Illinois!
How fair and how unlikely for that to happen!

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Old 07-26-2013, 09:09 PM   #57
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80-100% of final salary is crazy. My private sector pension is capped at 35% of salary, 1% for every year of service, 0.5% for each year if you take it at 55.
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Old 07-26-2013, 09:23 PM   #58
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80-100% of final salary is crazy. My private sector pension is capped at 35% of salary, 1% for every year of service, 0.5% for each year if you take it at 55.
You're a lucky guy....... The MegaCorp I toiled at now offers a DBP of 0% of your final salary! There is a decent 401k plan though.

It seems like the tide has turned for public pensions and we'll continue to see changes for new employees and for the future years of current employees likely involving 401k type plans.

I think the real issue when discussing underfunded public pensions is what to do about folks already retired and what to do about the credits already earned by current employees. I don't know of any instances in the private sector where an ongoing company rewrote history and reduced the pensions of retirees or told current employees that the credits earned in prior years and already in the books were being reduced. So in places like Illinois and Calif, we're treading on new ground. And we might be setting precedents that carry over to the private sector.
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Old 07-26-2013, 09:48 PM   #59
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80-100% of final salary is crazy. My private sector pension is capped at 35% of salary, 1% for every year of service, 0.5% for each year if you take it at 55.
Im curious about the private sector pensions that you are referencing since I don't know how they are funded.. Does the employee pay a match like most public sector employees do? If your not and you are receiving 35% based on your employer only contributions, wouldn't it make sense that if a public sector employee was matching his employers contribution, that his benefit would be roughly twice as much -70% in your case? The employers would both be contributing the same amount. Just asking.
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Old 07-26-2013, 09:54 PM   #60
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80-100% of final salary is crazy. My private sector pension is capped at 35% of salary, 1% for every year of service, 0.5% for each year if you take it at 55.
When you are in your own little world (referring to me during my early working years) you really have no clue to how good a pension system is. At 31 years, our system pays 80%. But due to the fact a persons 14.5% contribution is based on the total value of your compensation, not just salary, the take home pay in retirement is actually a bit higher. I went out 3 years earlier than 31, but my take home pay was still about 90% in retirement, but I am now on the hook for my own insurance. A person working 39 years would get 100% of salary but actually net out significantly more than working pay. I would say based on my experiences working, 3/4 of the people in the system could have cared less about the pension until turning 40 and then realizing that it is very valuable. But that is probably just human nature.
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