Risk Factor for Public Pensions?

[ripper1]

That's what I was thinking. And, if that's the case, all the more reason for prospective new Illinois employees to want to be on SS, even if it means dropping the current Tier II pension. Then they'd have their salary plus SS, period. No pension. No matching. No profit sharing. No stock options. No bonuses. It would be easy to understand the true value of your compensation. The state could set wages to attract and retain who they want. Employees could accept the simple terms (salary + SS and nothing else, nothing) or not. Employees could also leave if a more attractive situation presents itself leaving nothing behind. Everything they earned would be in their pocket when they walked out the door.

I know the politicians are against this. They don't want to pay into SS. And they want to be able to offer promises today that they don't have to pay until far in the future. But this "if you do this for me today, I'll give you a hamburger tomorrow" routine has certainly come to the point where we can see it doesn't work.

The folks in real limbo are the folks who are already retired or are deep into their careers and foolishly thought deferred compensation and post retirement perks would be honored. So far the courts are backing the retirees, but the politicians can always win by simply continuing to not fund the system.

"But the politicians can always wind by simply continuing not to fund the system." .......Yeah, there is a moral conundrum there. It appears now that the ISC is going to side with the City of Chicago Employees. The city council, Stephen Patton, has argued that by upholding the law that there would be guarantees in place now to fully make the contributions and that by doing so they are not diminishing but saving the pensions. He went on to say these pensions which represent workers other than police and fire would be essentially insolvent within 10 to 13 years. In other words he is saying that the funds itself would be responsible and the city would no longer be making any contributions going forward. At least this is what I gathered. To me this is morally wrong on lots of levels

 

[Chuckanut]

Yeah, CSRS retirement more closely resembled the sweetheart deals that still exist in a few state and local governments today.

This is true for many government institutions.

In my state, there are three pension plans, 1, 2, and 3. Plan 1 is the sweetest and has been closed since the late 1970's. Plan 2 is a DB plan, but, IIRC, the benefits take longer to earn and early retirement is not nearly as easy. Plan 3 is a hybrid, half DB, half DC.

This leads to confusion among the general population since Plan 1 is the plan that most current retirees are on, so many people assume that ALL public employees get the same deal. The reality is that most of the current workers, even many of the baby boomers are either on Plan 2 or 3, both of which are OK, but not as good as #1.

That said, I continue to maintain that pensions must be viewed as part of the entire compensation plan, and that makes the comparisons tough.

If I was a millennial or younger I would prefer to get my 'retirement benefits' as money that I can invest and control myself, 100%, nobody else can touch it. No politician, employer or corporate raider would be able to touch it.

 

[hnzw_rui]

That said, I continue to maintain that pensions must be viewed as part of the entire compensation plan, and that makes the comparisons tough.

Not to mention you have to consider fringe benefits, too. Health, paid sick time, vacation, salary versus hourly wage with overtime, etc.

 

[daylatedollarshort]

If I was a millennial or younger I would prefer to get my 'retirement benefits' as money that I can invest and control myself, 100%, nobody else can touch it. No politician, employer or corporate raider would be able to touch it.

That is definitely something to consider, especially after what happened recently to the multi-state teamster plans.

 

[Chuckanut]

Math Man

I got some good news (I believe) recently when my local state representative was put on the committee that oversees public pension policy. The young fellow has a Master's degree in Math and a PHD in Statistics. Hopefully, that will go a long way towards continuing the safe and sane pension policies that are guiding public pensions in the state.