Should publicly funded pensions start later?

[Emeritus]

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Originally Posted by FinanceDude I am convinced that mail service could easily be outsourced to a private enitity with much better fiscal results. Of course, that would never happen.........but I think someone like UPS or Fedex could do a WAY better job than the govt in running a monopoly............

At postal rates? With guaranteed nationwide coverage?
What's the Cheapest FEDEX price to alaska from DC?
I'm waiting for the Tea party to insist that Alaska pay the true cost of running mail service there

[Texas Proud]

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Originally Posted by Emeritus So I can raise your mortgage interest rate tomorrow and you can go shop for a new one if you don't like it? How aobut interst on a bond that isn't yet earned? Or did you bargain for that rate for the entire time period? Its not a trivial question. The prohibition on impairment of contracts is much more complex than you suggest.

Do you have a signed contract that says your benefits can not be touched ever Didn't think so... (if you do, then the lawyers did a very bad job as all benefit plans that I have ever seen has a clause in them where they can be changed at the employer discression)...

And as I said... the constitution can be changed...


If you also read.... I said we can not change your earned pension....


But, let's say that you still think that it is a contract obligation that we can not change going forward... what prevents us from firing everybody and then rehiring them under a new contract Unless you are working under a signed contract that has a specific time period, I don't think that you are hired forever (or do you think so)...

[beowulf]

You are correct - I have never had to manage a budget in a private company. But I have audited proposals from countless private companies and every one of them shows an increase in worker's salaries year to year. You can't tell me that most companies don't have seniority raises for years of service/experience as DCAA (Defense Contract Audit Agency) audits prove otherwise. There are merit increases over and above these and those are what you are referring to as performance based increases. But any employee who is denied a seniority increase is likely headed out the door for poor performance. Being satisfactory gets you some percentage and that keeps compunding every year. Virtually no companies are like Jack Welch's GE where you simply fire the lowest performing 10% each year. What I am saying is that everyone can't be above average and average employees still get raises every year - those are called seniority raises. Don't bother trying to tell me I am wrong - I just finished an audit of 5 mega-corp proposals - the base salaries for each and every one of the proposed employees increased annually over the 10 year proposed life of the contract. These proposals are submitted with certified cost and pricing data, which means that, if the information is falsified, the company is guilty of fraud.

As to a new employee performing better than a 20 year one, sure, that's possible, but extremely unlikely. In my field, it take between 7 and 10 years to reach the journeyman level. Few people will be at that the same grade level as new folks by then as promotions are far faster increasers of salary than longevity increases. Companies, as well as governments, love to get rid of older workers as they get away with paying new ones less. What normally happens the is that they realize they got rid of the most experienced people who really knew how to do the job and hire them back at exhorbitant salaries plus their pensions.

"It isn't personal at all. No one is looking to eliminate the pension you have worked for and are vested in."

That may be your opinion, but many posters here are saying something different. They have no qualms about cutting pensions for both vested people and retirees - all in the name of not having to pay higher taxes without even trying every other option first. That makes it very personal. If I were to lobby your mega corp as a stockholder (even with just 1 share) and tell them they needed to cut employee benefits so I could get a higher stock dividend, whould that be personal to you? I'll bet it would.

I have repeatedly said I have no issues with changing the system for new and even junior employees. That's a given. I have no problem with reducing the size of government workforces - they keep growing because constituents demand more services and then wonder why their taxes go up. I, and I believe, most other public employees would not object to a pay freeze for a year or two (increases are very low anyway at the moment) or even furloughs for 2 weeks if it would keep people employed and keep their current benefits intact.

I don't see that kind of sentiment posted here. I only see a desire to pay less taxes by lowering public employee's pay and pensions. And I do believe existing pensions can be cut, just as easily as laws can be changed, which is all the time. So a real danger does exist.

I do have many friends who work for private industry - they jump companies like pro atheletes change teams. They know their companies have no loyalty to them, so why should they have any loyalty to the company? I know very few private sector employees who reach retirement age with the companies they first started working for - most of them are my age or older. My daughter is in her mid-30s - has worked for 8 firms since graduating college - never been fired, but was laid off from 4. Government employees do not the ability to move as freely or quickly - many occupations don't exist in significant numbers in the private sector or are simply too esoteric. Not much of a demand for submariners, infantry, public school teachers, etc.

Oh yeah, I have over 40 years in my field of expertise and I am still learning. And, since I depend on laws that change with every Congressional term, the learning curve is still at a nice angle upwards.

[FinanceDude]

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Originally Posted by Emeritus At postal rates? With guaranteed nationwide coverage? What's the Cheapest FEDEX price to alaska from DC? I'm waiting for the Tea party to insist that Alaska pay the true cost of running mail service there

You can reduce mail delivery to 3 days a week for residential. Businesses can continue to get mail 6 days a week, but are given the option to have 3 day a week just like residential customers. The volume of mail overall has dropped signifcantly in the past 10 years due to online billpay, etc.

USPS is projecting an $8.5 billion shortfall so why not let someone else take a crack at it. Of course, there are those pension liabilities to think about, but you do get to run a MONOPOLY, so someone should be interested............

[FinanceDude]

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Originally Posted by beowulf That may be your opinion, but many posters here are saying something different. They have no qualms about cutting pensions for both vested people and retirees - all in the name of not having to pay higher taxes without even trying every other option first. That makes it very personal. If I were to lobby your mega corp as a stockholder (even with just 1 share) and tell them they needed to cut employee benefits so I could get a higher stock dividend, whould that be personal to you? I'll bet it would.

Well I am slef-employed, so not Mega-Corp for me. BTW, Mega-Corps are lobbied ALL THE TIME by shareholders wanting costs cut, and since payroll is the highest cost to any business, where do you think those cuts go.

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I have no problem with reducing the size of government workforces - they keep growing because constituents demand more services and then wonder why their taxes go up.

That is the funniest thing you've ever posted here....

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I, and I believe, most other public employees would not object to a pay freeze for a year or two (increases are very low anyway at the moment) or even furloughs for 2 weeks if it would keep people employed and keep their current benefits intact.

No teacher in America would agree to that..........

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Government employees do not the ability to move as freely or quickly - many occupations don't exist in significant numbers in the private sector or are simply too esoteric.

The reason a lot of govt employees don't leave is their benefit package and the fact that they are almost never reviewed on PERFORMANCE. Start doing performance reviews, you can start with the teachers, the IRS, USPS, and state DMV's...........

[Texas Proud]

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Originally Posted by beowulf You are correct - I have never had to manage a budget in a private company. But I have audited proposals from countless private companies and every one of them shows an increase in worker's salaries year to year. You can't tell me that most companies don't have seniority raises for years of service/experience as DCAA (Defense Contract Audit Agency) audits prove otherwise. There are merit increases over and above these and those are what you are referring to as performance based increases. But any employee who is denied a seniority increase is likely headed out the door for poor performance. Being satisfactory gets you some percentage and that keeps compunding every year. Virtually no companies are like Jack Welch's GE where you simply fire the lowest performing 10% each year. What I am saying is that everyone can't be above average and average employees still get raises every year - those are called seniority raises. Don't bother trying to tell me I am wrong - I just finished an audit of 5 mega-corp proposals - the base salaries for each and every one of the proposed employees increased annually over the 10 year proposed life of the contract. These proposals are submitted with certified cost and pricing data, which means that, if the information is falsified, the company is guilty of fraud. As to a new employee performing better than a 20 year one, sure, that's possible, but extremely unlikely. In my field, it take between 7 and 10 years to reach the journeyman level. Few people will be at that the same grade level as new folks by then as promotions are far faster increasers of salary than longevity increases. Companies, as well as governments, love to get rid of older workers as they get away with paying new ones less. What normally happens the is that they realize they got rid of the most experienced people who really knew how to do the job and hire them back at exhorbitant salaries plus their pensions. "It isn't personal at all. No one is looking to eliminate the pension you have worked for and are vested in." That may be your opinion, but many posters here are saying something different. They have no qualms about cutting pensions for both vested people and retirees - all in the name of not having to pay higher taxes without even trying every other option first. That makes it very personal. If I were to lobby your mega corp as a stockholder (even with just 1 share) and tell them they needed to cut employee benefits so I could get a higher stock dividend, whould that be personal to you? I'll bet it would. I have repeatedly said I have no issues with changing the system for new and even junior employees. That's a given. I have no problem with reducing the size of government workforces - they keep growing because constituents demand more services and then wonder why their taxes go up. I, and I believe, most other public employees would not object to a pay freeze for a year or two (increases are very low anyway at the moment) or even furloughs for 2 weeks if it would keep people employed and keep their current benefits intact. I don't see that kind of sentiment posted here. I only see a desire to pay less taxes by lowering public employee's pay and pensions. And I do believe existing pensions can be cut, just as easily as laws can be changed, which is all the time. So a real danger does exist. I do have many friends who work for private industry - they jump companies like pro atheletes change teams. They know their companies have no loyalty to them, so why should they have any loyalty to the company? I know very few private sector employees who reach retirement age with the companies they first started working for - most of them are my age or older. My daughter is in her mid-30s - has worked for 8 firms since graduating college - never been fired, but was laid off from 4. Government employees do not the ability to move as freely or quickly - many occupations don't exist in significant numbers in the private sector or are simply too esoteric. Not much of a demand for submariners, infantry, public school teachers, etc. Oh yeah, I have over 40 years in my field of expertise and I am still learning. And, since I depend on laws that change with every Congressional term, the learning curve is still at a nice angle upwards.

Sounds to me like they are union... and unions usually want a cost of living increase each year (or just an increase)... in the private sector they usually give people a small salary increase to cover inflation.... but not because you have one more year of experience...

There are people in my firm who have not had a raise for 5 years... because they are doing the same job they did... and are not doing anything different than they did 5 years ago...


It might seem strange... but when I first started working for a big accounting firm... after 1 year the new recruits were paid more then the people who had 1 year experience... the people with the 1 year experience were hired in during a recession and they did not have to offer us as much as there was not a lot of job offers.... but the next year a lot of people were going after graduates... so salaries were about 10% higher... we did not get a 10% raise to make us whole... nor did we get a raise for or extra year of experience.... it was life.. we had the option of going to find another job... or we stuck it out and grumbled....

[ERD50]

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Originally Posted by beowulf Don't bother trying to tell me I am wrong -

I won't even comment, that says it all.

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Originally Posted by beowulf You can't tell me that most companies don't have seniority raises for years of service/experience as DCAA (Defense Contract Audit Agency) audits prove otherwise. There are merit increases over and above these and those are what you are referring to as performance based increases. But any employee who is denied a seniority increase is likely headed out the door for poor performance.

Well, I can tell you, but whether you listen or not....


It seems your experience may be limited to Defense Contracts? I didn't work in that area. And I can tell you unequivocally that my MegaCorp (and MegaCorps tend to be quite uniform in these areas) absolutely had no regular standard raise that was not based on performance. Let's say the dept had a 5% budget for annual raises - if I went into my boss, and said that I wanted to give 'Joe' a 5% raise because he'd been here 15 years, I could expect an hour long lecture re-hashing our performance based system. 'Joe' might be a solid performer, and of value to me because I can count on steady results. But if the rest of the team is progressing and out-performing 'Joe', he just isn't going to get 5%. And if 'Joe' can't find a better deal elsewhere, he'll take his zero or low% raise and be happy he's still making a total compensation package good enough to retain him.

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As to a new employee performing better than a 20 year one, sure, that's possible, but extremely unlikely.

It depends on the field. Experience counts for a lot, but I've seen a few really bright, motivated upstarts that really do 'hit the ground running'. It does happen. And I don't mind telling you that in a few short years, they passed me up by many measures (sometimes they started their own businesses). And my point is that those upstarts will get the large slice of the dept budget. No question about it.

Oh, and your posts are getting long - could you PLEASE learn to use the QUOTING system properly? It would make your posts easier to read. The quoting system is not very user-friendly, there are some tricks that need to be learned to use it effectively (and I get lazy sometimes and don't bother as it's a pain), but post to the FORUM ADMIN section and we can help out (it would be good to document those tips for everyone, and maybe I'll learn something too).

-ERD50

[MichaelB]

1. Actuaries don’t determine pension contributions, they project future obligations.
2. Financial advisors don’t project future returns, pension fund management does, and elected political leadership approves and has final responsibility.
3. Over the past 3 decades there have been numerous changes in private sector pensions and retirement terms that were considered unchangeable. There is no reason to think public sector systems are immune from this.
4. The change in a retirement systems that tends to have the greatest impact is freezing the nominal benefit at current levels.
5. There are many thousands of independent public sector retirement plans and pensions. State obligations are generally considered not eligible for bankruptcy, but other public sector constituents, such as municipalities and counties are. The private sector has had much success using this strategy.

6. I suspect the most likely outcome will be a substantial reduction in public sector employment. This accomplishes three things: 1) contains the growth in future obligation, 2) frees budget to increase pension funding, and 3) frees budget for future spending.

This is the tip of the iceberg.

[ERD50]

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Originally Posted by beowulf I, and I believe, most other public employees would not object to a pay freeze for a year or two (increases are very low anyway at the moment) or even furloughs for 2 weeks if it would keep people employed and keep their current benefits intact.

Your 'beliefs' are out of sync with the facts.

Again, unequivocally, this is not the case. In our school district, they ran into funding problems. The District had two options:

One - eliminate some classes, because contractually they could lay off the teachers if there were no classes for them to teach. Of course, that hurt the kids, and it hurt the teachers who would get laid off.

Two - ask the Union to open the contract for re-negotiation. The District wanted to freeze their automatic raises for two years. The Union would not even consider it.

So kids lost out, some teachers lost out, and there is resentment that among the people paying those taxes, many of whom have had their incomes frozen or reduced. Why should teachers be immune from raise freezes in bad times?

Your credibility keeps going down as you tell us things we know to be false. I'll leave it up to you to report the % of public employees who volunteered the past few years to have their pay or hours cut to help balance the budget.

-ERD50

[MichaelB]

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Originally Posted by beowulf Being satisfactory gets you some percentage and that keeps compunding every year. Virtually no companies are like Jack Welch's GE where you simply fire the lowest performing 10% each year. What I am saying is that everyone can't be above average and average employees still get raises every year - those are called seniority raises. Don't bother trying to tell me I am wrong - I just finished an audit of 5 mega-corp proposals - the base salaries for each and every one of the proposed employees increased annually over the 10 year proposed life of the contract. These proposals are submitted with certified cost and pricing data, which means that, if the information is falsified, the company is guilty of fraud.

I won’t say you are wrong, but this is not at all representative of business in general. Medium and large companies in the US that have shown remarkable profit resiliency over the past 3 years do not give “seniority raises” and are very tough on salary in general. This includes forced salary reductions and suspension of retirement contributions. Lots of companies have high management initiated turnover. There is a striking age coincidence of older people leaving and younger people joining.

I am quite reluctant to generalize, but one thought I feel is shared by most of the folks that are critical of public sector salary and retirement programs is:
Private sector employees have been subject to very harsh and aggressive pay and employment practices for the past 2 decades and it is unfair that public sector employees seem to feel that are exempt from those same practices.

[REWahoo]

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Originally Posted by MichaelB I won’t say you are wrong, but this is not at all representative of business in general. Medium and large companies in the US that have shown remarkable profit resiliency over the past 3 years do not give “seniority raises” and are very tough on salary in general.

This was certainly the case at the company where I worked for almost 30 years. Seniority had no impact on salaries, only on vacation time and severance pay.

[beowulf]

ERD50- "So kids lost out, some teachers lost out, and there is resentment that among the people paying those taxes, many of whom have had their incomes frozen or reduced. Why should teachers be immune from raise freezes in bad times?
Your credibility keeps going down as you tell us things we know to be false."

Because they are no more false than the generalizations everyone else makes. Teacher pay is frozen for the third year in a row in Fairfax County, VA. Maybe it's not in Northern Illinois, but it is here. Along with fire department and police personnel raises this year. So when you say that teachers should not be immune from raise freezes in bad times - they are not - in VA. So your generalization is just as false as your assumption that mine was. They are both true, just for different parts of the country.

I don't like the quote feature because it brings into the post far too much information. I note that many folks here use the entire previous post in their quote, thus making it twice as long. I'd rather use my talking space for my comments, and, since I am outnumbered about 10 to 1, I figure I need to say 10 times as much .

I am referring to large defense contractors - they receive the lions share of federal procurement dollars, so they should be a pretty good indicator for firms of that size. Every one of these firms also does substantial non-DoD business. They have what is called DCAA Certified Cost Accounting Systems. This means they have been thoroughly reviewed and that we trust them enough to award cost type contracts to them. I don't know much about smaller companies as we tend to award FFP and T&M contracts to them and they do not generally have certified systems. We do have visibility into their costs, but, in competitive situations, tend to negotiate on a best value basis (no, not lowest priced offeror, which we are constantly accused of doing). I can unequivically say that the mega companies we deal with do charge us for across the board inflation increases. The penalty for fraud is suspension or debarment (S&D) from all government business and a comfy jail cell next to Bernie Madoff . In a previous incarnation I was the S&D lead for all DoD - we did knock out a lot of companies for fraud. And then the US Attorney took over with criminal charges.

I agree that public sector employees have been, for the most part, insulated from the deep recession we are currently in. At the same time, the absolute sanctity of government employment is a myth. Every time you read about a base closure, about a post moving to a new part of the country, a fighter wing or home port moving, you are actually reading about large numbers of federal employees (and some local government employees) losing their jobs. Again, I can only state what I know to be true. Two major commands recently moved out of the DC area - one to Huntsville, AL and one to St, Louis, MO. About 80% of the federal workers did not make the move. Some were able to find other federal jobs, some went to private industry and the largest number simply took early or regular retirement. If they got jobs after that, great, but I don't know the stats. And a lot more of this is coming, so feds don't have the grip on their jobs they once had. Also remember, that each of these jobs was backfilled at the new location - so the gov is now paying a retirement and a salary, so there really was no savings in the move. Only in closings.

Regardless of unions influence or anything else, the employees are not to blame - they are victims of governments that wanted people to work for them, in many cases at wages less than prevailing for the same jobs in private industry, and the claw to grab them was better benefits.

[REWahoo]

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Originally Posted by beowulf I don't like the quote feature because it brings into the post far too much information. I note that many folks here use the entire previous post in their quote, thus making it twice as long. I'd rather use my talking space for my comments, and, since I am outnumbered about 10 to 1, I figure I need to say 10 times as much .

You may be shooting yourself in the foot.

Failing to use the quote function makes the post more difficult to read and calls into question the accuracy of the "manually" quoted material.

[ChrisC]

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Originally Posted by ERD50 Your 'beliefs' are out of sync with the facts. Again, unequivocally, this is not the case. In our school district, they ran into funding problems. The District had two options: One - eliminate some classes, because contractually they could lay off the teachers if there were no classes for them to teach. Of course, that hurt the kids, and it hurt the teachers who would get laid off. Two - ask the Union to open the contract for re-negotiation. The District wanted to freeze their automatic raises for two years. The Union would not even consider it. So kids lost out, some teachers lost out, and there is resentment that among the people paying those taxes, many of whom have had their incomes frozen or reduced. Why should teachers be immune from raise freezes in bad times? Your credibility keeps going down as you tell us things we know to be false. I'll leave it up to you to report the % of public employees who volunteered the past few years to have their pay or hours cut to help balance the budget. -ERD50

Not sure you can dispprove someone's beliefs based on your anecdotal facts. My anecdotal facts, on the other hand, tend to support the view that teachers would go along with pay freezes. My daughter begrudgingly went along with them for the last two years and so did many of her colleagues. Pay raises look unlikely this year for Fairfax teachers | Washington Examiner

BTW, my daughter, with a passion for teaching and an advanced graduate degree decided to quit public school teaching. While low morale did not cause her to quit, it certainly made it very easy for her to walk away from her job.

[FinanceDude]

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I agree that public sector employees have been, for the most part, insulated from the deep recession we are currently in.

Bingo, that's the real issue of what started this whole conversation. We have many public sector employees with their heads in the sand thinking that the recession is "someone else's problem" and "where's my COLA increase and my pension match". We can't raise taxes like in the "old days", so public sector employees are going to have to face the recession now.............

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largest number simply took early or regular retirement.

At least they were able to do that, unlike most folks that don't have pensions and healthcare benefits........

[youbet]

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Originally Posted by GregLee From article XVI of the Hawaii state constitution:

That seems reasonable. Annuitants are fully protected. Current employees are protected for years already worked but could have the rules changed for future years. Employees not yet hired might be facing a new set of rules, as happened in Illinois.

[MichaelB]

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Originally Posted by beowulf I am referring to large defense contractors - they receive the lions share of federal procurement dollars, so they should be a pretty good indicator for firms of that size.

If you mean large defense contractors should a good indicator of other large firms, I would have to respond absolutely not. There are far more differences than similarities, especially in compensation practices.

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Originally Posted by beowulf Regardless of unions influence or anything else, the employees are not to blame - they are victims of governments that wanted people to work for them, in many cases at wages less than prevailing for the same jobs in private industry, and the claw to grab them was better benefits.

Employees are not victims. They did not cause excessive generosity but they have taken advantage of it. Like homeowners that did not cause the housing bubble, but nonetheless attempted to benefit from it and now must pay. How the employees pay remains to be seen, but it seems unlikely to me that they will avoid this.

Money always follows the path of least resistance. Salary freezes, followed by headcount reductions are only the beginning.

[youbet]

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Originally Posted by ChrisC Not sure you can dispprove someone's beliefs based on your anecdotal facts. My anecdotal facts, on the other hand, tend to support the view that teachers would go along with pay freezes. My daughter begrudgingly went along with them for the last two years and so did many of her colleagues. Pay raises look unlikely this year for Fairfax teachers | Washington Examiner BTW, my daughter, with a passion for teaching and an advanced graduate degree decided to quit public school teaching. While low morale did not cause her to quit, it certainly made it very easy for her to walk away from her job.

I always find the subject of teacher turnover interesting. Because teachers, at the k through high school level, are certified and/or licensed by the state, it's a bit of a big deal (at least to the teacher) when they make a career change. After all, they just invested years and money in an education aimed at prepping them for a life long career in education. And their typical salary progression, as negotiated by their powerful unions, is built around a career in teaching where one does nothing else from graduation through retirement.

My own opinion (DW is a retired teacher and I've listened to literally hundreds of hours of bitch sessions at social gatherings where the guests were primarily teachers) is that the performance of schools would be improved with a little more churn in the work force. Listening to a teacher that is 20 years into a teaching career talk about truly hating his/her job and focusing more on the side business they run summers and after school is scary. You sure hope your kid isn't in their class as they go through the motions of teaching but hating every minute.

I'd like to see it become easier to enter and exit the field. Portable pensions would help ease career changes out for teachers desperate for change. Salary schedules that give less senority credit would ease entry into teaching and make it easier to recruit hard to find skill sets in math, science and languages.

[MichaelB]

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Originally Posted by youbet I always find the subject of teacher turnover interesting. Because teachers, at the k through high school level, are certified and/or licensed by the state, it's a bit of a big deal (at least to the teacher) when they make a career change. And their typical salary progression, as negotiated by their powerful unions, is built around a career in teaching where one does nothing else from graduation through retirement. My own opinion (DW is a retired teacher and I've listened to literally hundreds of hours of bitch sessions at social gatherings where the guests were primarily teachers) is that the educational performance of schools would be improved with a little more churn in the work force. Listening to a teacher that is 20 years into their career talk about truly hating their job and focusing more on the side business they run summers and after school is scary. You sure hope your kid isn't in their class as they go through the motions of teaching but hating every minute. I'd like to see it become easier to enter and exit the field. Portable pensions would help ease career changes out for teachers desperate for change. Salary schedules that give less senority credit would ease entry into teaching and make it easier to recruit hard to find skill sets in math, science and languages.

Agree

[beowulf]

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Originally Posted by REWahoo You may be shooting yourself in the foot. Failing to use the quote function makes the post more difficult to read and calls into question the accuracy of the "manually" quoted material.

I guess I'll have to follow the rules - occasionally .