Pension question and resentment

[NW-Bound]

From the above info, it is amazing how the average voter or taxpayer knows so little about how politicians spend our money! I myself know little about these matters. WE ARE DOOMED!

 

[clifp]

I don't know if you are pulling our leg or what, but that kind of deal after only 5 years of service is ridiculous. If it is true, it is no wonder that California is one of the states with bad financial problems.

I just hope the federal government doesn't step in and bail out the states. I can vote with my feet and move out of my state when it goes belly up due to these pension problems and other spending issues and move to Alaska where oil pays for everything and money grows on the trees, but I can't easily escape the fed if they decide to bail out every bankrupt state.

CalPERS has a bunch of different plans, but in general a 58 year old state employee with 5 years of service would be eligible for a pension between 8-12% of their final salary. So Xynny example sounds exactly correct. Xynny was she able to collect the pension immediately or does she have to wait until 60 or 62?

Believe it or not in California employees pension are pretty average. Most of the pension ratings put CalPERS right in the middle of all the state in terms of financial health, albeit still significantly underfunded. A five year vesting retire is not too unusual, nor is the option to buy 5 years of service.


The 100K and 200K pensions get the headlines, but if you think about the millions of folks in their 50s who join local government for the pension and medical benefits are really the drain on the system. Most of the folks on the list of NY pensioner getting more than 100K had 35-45 years in service. Their contributions (and the states when made ) would have a had time to grow to a pretty large sum. In contrast in Xynny family members case, her contribution would have included 2008, when she retires CalPERS will be lucky to break even on her contribution. FYI, under most CalPERS plans the combined employee and employer plans is between 12-20%. So the deal is even better than you thought.

 

[xynny]

Yes she can collect immediately. As far as I know under Calpers you have to collect within a year of your retirement so it makes sense to just take it as soon as possible. I had nO idea how good these benefits are until my relative told me. If you consider the 4 percent rule that's popular here then it would take 1 million to generate a 3600 a month benefit. There is no way for a person making 80 k a year to save that much in 5 years under normal circumstances.

 

[martyp]

If you want to see a California story about pensions that are causing public resentment then check out this story link. Top executives at the University of California are threatening to sue the state if the state doesn't lift a cap on pensions for salaries over $245k.

UC execs' demand for more benefits angers many

It's not all about greedy unions . . .

 

[martyp]

I am in the process of retiring from the University of California system. Employees didn't pay into the pension fund for about 2 decades because the pension fund was over funded. That, of course, is no longer the case and the University is modifying their DB plan to address the issue. I think it is true that employees become vested after 5 years. You can retire at 50 years. There is an increasing age factor from 50-60 yrs. You get the highest average 3 year salary. In my case I will retire at 55 with 30 yrs of service credit and will get 50-55% of my salary with a California COLA and health benefits. I know this is a great deal and fairly unusual in this day and age. My salary was comparable to industry salaries. Not too high, not too low. I was able to hire employees at lower salaries because the benefits and pension plan were a significant draw to those who paid attention to benefit plans. People do make trade-offs between public and private sector employment.

By the way, this pension plan was not necessarily driven by union agreements. It seems to be mostly due to top universities competing with each other. That was one of the reasons given for keeping a DB plan in the recent modifications.

The benefits/pension plan is probably useful for recruiting professors and top executives but probably not much of a factor for entry level employees. However, the pension plan is a huge factor for retention of older employees in which the organization has invested. This is a good thing for keeping top professors. Probably a bad thing if you want to get rid of some deadwood.