Pension haters

[powerplay]

I have a pension and am thankful for it. I also worked under SS and have about 36-37 qualifying quarters. SS requires 40 quarters so unless I work somewhere to earn the remaining credits I will never be eligible. The 10 years worked under SS reflect contributions to a system I will never receive benefits from. I didn't always earn enough to get the credits though did do the typical 10 years under SS.

[Greencheese]

I think Amethyst hit it right on the head. Highly skilled government positions pay next to nothing and generally aren't the big bad things. Its the low skilled ones that are deemed ridiculous.

A private sector janitor might make $9-$11 an hour while a government janitor can sometimes make $13-$19 from what I've seen. Sure the job may differ slightly but in the end, at least for the low end jobs, the government truly pays too much. Reminds me of my high school days lifeguarding where the private company pools paid minimum wage and the public pools paid you $2 over minimum wage. I worked at both so I guess 2 full time jobs beat a full time at just 1!

[H2ODude]

Not sure I have anything really useful or new to add. Just an observation. Pensions (well, primarily government ones, and they seem to attract most attention and abuse) vary over a tremendously wide range. Add to that the "government workers are usually paid less" assumption (that has been correctly disputed in some above posts) and you can mix and match some strange situations. As in workers who really aren't underpaid yet getting ridiculously generous (often through nefarious techniques) benefits. Add to that that in most such cases, the taxpayer/ratepayers are underwriting the largesse through corrupt (morally if not otherwise) politicians. So I do believe there are cases that elicit "hate" from individuals because it is simply .... wrong. I'm one of those who get indignant about such cases but I don't think I have or will express it specifically on this board.

I know in the last organization I was in (local government) the lower paid laborers were well above market if included all benefits. Engineers, technicians and professionals in general were not and were underpaid relative to market, all things included. Well, that's what HR said but I always felt government offered some flexibility and quality of life that made up for it. Did for me anyway. But I'd say it was a fair pay plan in general. Over the 15 years never saw 'em running for the door when the economy got good.

The pension plan, at 1.8% a year was in my opinion good, and fair. IIRC half by employee, half by government. Said was Cola but has been none for 4 years, which is fine. I'd rather have it viable. I would not have been able to leave with that benefit when I did (at 60) unless I paid in about three years gross salary to buy 10 years, allowed because I had previous government service for which I had no pension (was pissed and took my money with me). It was I believe an totally actuarially based even cost. But I LOVED the fact that I could convert some of my savings to what was/is a stable pension, sort of annuitize those three years of salary. Yes, I'll have SS but to make it a true three legged stool where a total market dump doesn't cripple the plan is a great blessing I'm thankful for.

So there's disclosure of what I got. HOWEVER. When I read of states/localities where employees pay no contributions, or the employer underfunds, or there are guaranteed colas, or there are more generous offerings including spiking, overtime boosts, etc, it makes me a little upset. I feel like I paid a fair price (8% of salary plus three years for the ten) and the folks have made it actually sustainable. Places where the "costs" have been less and the plans are in trouble don't really make me a "hater" but raise a lot angst. I mean, some of the cases cited (especially with disability) are over the top. Should a garbage collector in Detroit lose most of his pension? No. But who is going to make good on those past unsustainable promises. And I'll just add that the other local government I worked for has a more generous benefit and is now in great political pressure trying to solve it. It was more generous by far than the one I have but one of the features was if you left and chose not to vest, you got handed your contributions with zero interest. Which I did.

Long post i know. But I just wanted to offer what my history was and that I think properly funded pension plans that are soundly managed for sustainability, and accounted for in what the overall salary/benefit package is the employees is legitimate. A lot of qualifiers there, but that's what makes sense to me. But I reserve the right to hate the fact that there are pensions out there that fall far short of those qualifiers!

[Co2012]

Quote:

Originally Posted by ripper1 What percentage of public employees get to do this. I would say 1% or less.

I would like to respectfully say that the percentage of people who double dip is more than you could ever imagine, especially in administrative positions. One percent is nowhere close at least not in the public system that I worked and I am not just guessing.

[ABQ2015]

I thought this thread got a rather hostile about public sector pensions. I had commented about my federal pension but after reading the previous 2-3 pages, decided to delete my post. It seemed to be a sore spot for some. I agree with the OP. Decided at that point to keep my mouth shut.


http://www.early-retirement.org/foru...egs-69963.html

[nash031]

Quote:

Originally Posted by ERD50 I can think of one area that brings up some hostility though. Sometimes a public pensioner will really wave the flag that they earned these benefits and that they are 'sacred', and no one should be discussing cuts to them. OK, I understand the feeling, but I can't recall seeing any acknowledgment from them that those in the private are subject to limits on their pension benefits if their company goes bust (covered by the PBGC, which we paid into). So yes, it might get a little hostile when they claim their benefits are sacred, but mine aren't, and they need to raise my taxes to pay their benefits. None of that would be a problem if taxes were collected this year to pay benefits this year, with no future promises.

Well, as a future public (military) pensioner, I can say that the recent attempted cut to retirement benefits was frustrating from the standpoint that there is so much other wasteful government spending going on - you don't even have to look outside the military budget to find enough money to correct it - and the cut was so insignificant to the Defense budget on the whole, that yes, it was extremely frustrating to see that be the FIRST thing to go on the chopping block.

I am an advocate for dismantling the military pension system, but it needs to be done the right way. And it needs to be done with attention paid to reducing other cost overruns (programs, weapons procurement).

So while I may not be a "public pensioner" yet, I do believe that my benefits should be sacred as I entered into a commitment under certain expectations. That said, I do NOT expect YOU to pay for it necessarily. I expect the government to be good stewards of the money they already have, rather than simply seeking out more from the taxpayer.

And they're not. Plenty of things to fix before raising taxes becomes the correct answer.

[timo2]

Quote:

Originally Posted by ABQ2015 I thought this thread got a rather hostile about public sector pensions. I had commented about my federal pension but after reading the previous 2-3 pages, decided to delete my post. It seemed to be a sore spot for some. I agree with the OP. Decided at that point to keep my mouth shut.

To me, the bias a few folks here have about pensions is actually a symptom of a subtext of resentment of government workers by certain segments of the population. Not jealousy or anything like that. As a government worker, I actually was expecting more of that here, and have been pleasantly surprised that there are fewer of those folks that resent government workers on this site than in the general population, in my experience.

Government workers have had so many rotten comments about them made in the press, in public, and by politicians that we can be little touchy and probably over-sensitive to comments that non-governmental workers might not think anything of. I got the impression that this is where the OP was coming from.

[ShortInSeattle]

I'm not a fan of pensions, but it's got nothing to do with the money itself. I work with both pension and non-pension employers as a consultant, and I think pensions can create pretty crummy workplaces. Here are some of the things I see in pension-offering organizations:

- Bloated management structures full of people waiting for the tenure clock to hit the magic number.
- A fair number of lazy workers who are just doing the minimum to avoid being fired - putting in the time with great reluctance.
- Management reluctant to fire said lazy workers because it seems unfair to deprive someone of a pension unless they do something truly horrific.

Basically, locking someone into one company for 20-30 years leads to a fair number of poor fits that no one wants to address. It strongly disincentivizes exits, leading to a build up of grouchy people and incompetents. Most people are NOT grouchy incompetents of course, but even 10% of these folks in an org can be toxic.

TLR: Pensions make workplaces crummy because unhappy workers stay, and mediocre workers are less likely to be fired.

[gcgang]

Quote:

Originally Posted by linny727 This forum is usually respectful to everyone, however, when the topic of public pensions come up, there are nasty folks that have to weigh in. You do not pay for my pension. I paid for my pension, the City I worked for contributed to my pension and 75% percent of the rest is investments that the pension services makes. Did you want to make the pitiful income I made for 25 years, unable to buy a house or have extra money for investments? I don't begrudge you your million here and your property there. I applaud you. This why people with pensions keep their mouths shut on this forum or leave it.

Ok, I'll admit it. I'm the one who hates pensions. It's because when I was traveling around Europe, I stayed in some of those pensions, and the food was terrible!

[beowulf]

While this may have been said in another thread, I have not seen it in this one. The fact that many state and local pensions were underfunded raises the question of funding then and funding now. By that I mean the government in question would have had to raise taxes in the past to adequately fund pensions due now. So taxpayers were not required to pay these taxes when they should have. Not including mismanagement, fraud, spiking, etc., the end game is roughly the same. I know this is esoteric, but in terms of constant value, the taxes that should have been paid by the public for services received in the past are simply coming due now as public servants retire.

As far as double dipping goes, members of the military have moved easily into federal jobs for many years, but it wasn't until Clinton was president that salary restrictions for these folks were essentially removed. I don't think civil servants retiring from government should have any restrictions (other than ethical and programmatic) in working for companies that sell them back to the same government entity. At the same time, I don't believe the government should be doing this on the scale that is happening now. It actually costs far more to hire these people as consultants than training new people who will eventually have to be brought on anyway as the retirees age out.

I do empathize with those who worked for private companies that went under or reneged on their pension promises in other ways. But complaining about those who do have pensions is simply sour grapes. We all made choices and we have to live with them.

[Fermion]

I do not like the way some states exempt pensions from state taxes but do not exempt 401K distributions. This type of inequality just fuels the hate.

[gozer]

Quote:

Originally Posted by Fermion I do not like the way some states exempt pensions from state taxes but do not exempt 401K distributions. This type of inequality just fuels the hate.

What I have always found strange was that the Federal government forced companies to pay into a newly created Federal Corporation called the PBGC which is funded by fees from the participating pension plans, not tax dollars. They did this as part of the Employee Retirement Income Security Act of 1974. And then later when the Federal government determined too many companies were under funding their pension plans they made underfunded pensions pay higher premiums to the PBGC because they were more likely to fail. This was done by the Pension Protection Act of 2006. I'm not aware of the Federal government spanking states like this. i.e. pushing them to do the right thing. Maybe I missed it. I don't follow public pensions because I don't have one, mine are private.

Maybe these other inequalities are the way the State government is trying to help the public pension plans out. Quite frankly, I prefer the spanking approach.

ETA: I realize I kind of mushed up the state vs federal line there. So I fixed it.

[nash031]

Quote:

Originally Posted by ShortInSeattle I'm not a fan of pensions, but it's got nothing to do with the money itself. I work with both pension and non-pension employers as a consultant, and I think pensions can create pretty crummy workplaces. Here are some of the things I see in pension-offering organizations: - Bloated management structures full of people waiting for the tenure clock to hit the magic number. - A fair number of lazy workers who are just doing the minimum to avoid being fired - putting in the time with great reluctance. - Management reluctant to fire said lazy workers because it seems unfair to deprive someone of a pension unless they do something truly horrific. Basically, locking someone into one company for 20-30 years leads to a fair number of poor fits that no one wants to address. It strongly disincentivizes exits, leading to a build up of grouchy people and incompetents. Most people are NOT grouchy incompetents of course, but even 10% of these folks in an org can be toxic. TLR: Pensions make workplaces crummy because unhappy workers stay, and mediocre workers are less likely to be fired.

There is a LOT of truth to this, particularly in the military (at least in my experience).

[2B]

Quote:

Originally Posted by ShortInSeattle I'm not a fan of pensions, but it's got nothing to do with the money itself.

I disagree. It's all about the money. The problems you pointed out all have to do with poor corporate management. I don't think the pensions cause it. I have seen people stay with jobs they hate because of the pension but that's usually for people trying to get in their last few years before hitting the magic "rule of 80 or 85."

I currenty am with a company that only has a 401k but it has a 5% of salary match if we contribute 6%. I'm also paid very well compared to what I believe comparable positions would pay with pension granting companies. I used to be with one of them but for some strange reason go let go 2 years before I vested for full retirement. I currently am due a discounted pension based on my age when it starts. If I had vested I would have gotten the full pension amount 6 years ago instead of having to wait until I would turn 65. Age discrimination? I'd never be able to prove it but there was a definite bias against "almost vested" people during the lay-offs.

Many years ago I calculated that if I could religiously put away an extra 2 or 3% of my salary I could replace the pension. I was young at the time and interest and dividend rates were much higher. I've not repeated the calculation. Most private pension plans target to put a maxed out employee at 60% or so of their ending salary including SS. SS is somewhat COLA'd but the company portion is not. I think that the reality is that very few people ever max out the private pension plans. Fewer have them available every year.

[donheff]

Quote:

Originally Posted by clifp I actually find the Federal employee retirement system to be a model, that I wish state,local, and corporations adopted. The FERS system includes a traditional pension which with SS provides an adequate retirement. However, if you want to retire early you have to save on your own.

Quote:

Originally Posted by ziggy29 +1 You can follow all these so-called "pension envy" threads going back to the darkest days in 2008-09, and even then I was advocating for the FERS model of retirement planning, one that has a truly three-legged stool. Perhaps the feds' early adoption of this model, some 30 years ago, is part of the reason why federal pension liabilities aren't as onerous as state and local liabilities, and why CSRS isn't bankrupting Uncle Sam like legacy state and local plans that often are still open to new hires. If the last 30 years of Federal hires were on CSRS, it might be a much uglier budget picture for the US Treasury.

I agree with both of these sentiments but I see a potential problem looming that we already see in social security. It has been decades since I closely looked at the FERS funding model but as I remember the concept the pension component is "fully funded." that is, between the employee contribution and the government contribution (both of which are transferred to OPM by employees' payroll offices) the FERS Retirement Fund covers all pension costs. BUT, like social security, I believe the retirement fund is just an accounting line item. I believe the actual dollars are just dumped into the general fund to offset current costs. As a consequence the pension obligations will possibly eventually build up to a significant drag on current spending. There is a danger that future taxpayers will start talking about the "fiction" of the retirement fund just as they now talk about the "fiction" of the Social Security Trust Fund.

I don't have any good answers for this because I agree with the common sense of maintaining the trust funds as accounting entries. I do the same thing with my "mad money" account which has been building up from unspent dollars from my annual safe withdrawal amounts. Just like taxpayers, if we have a serious downturn I will probably rethink whether my "mad money" account is really available for "mad" spending in the face of a reduced SWR or whether it was all just a fiction.

[ziggy29]

Quote:

Originally Posted by donheff I agree with both of these sentiments but I see a potential problem looming that we already see in social security. It has been decades since I closely looked at the FERS funding model but as I remember the concept the pension component is "fully funded." that is, between the employee contribution and the government contribution (both of which are transferred to OPM by employees' payroll offices) the FERS Retirement Fund covers all pension costs. BUT, like social security, I believe the retirement fund is just an accounting line item. I believe the actual dollars are just dumped into the general fund to offset current costs. As a consequence the pension obligations will possibly eventually build up to a significant drag on current spending. There is a danger that future taxpayers will start talking about the "fiction" of the retirement fund just as they now talk about the "fiction" of the Social Security Trust Fund.

Yes, I suspect that at least *some* of the ability of the federal plans to look more solvent and sustainable may come from the fact that the federal government has a lot more "shell game" options than states and cities can do. Plus, states can't print money and most states and cities have constitutional prohibitions on deficit spending. All that together makes it much more difficult for states and cities to hide systemic problems in their pension plans.

[travelover]

For people like us on this forum, 401(k)s make a lot of sense. For the average Joe that lives paycheck to paycheck, has no investing acumen or discipline and will probably end up living on Social Security, pensions do make sense. That doesn't excuse underfunding and spiking types of abuses, but it does recognize the reality. It would seem that a portable pension or annuity that is actuarially sound would allow the average American to invest for their retirement and benefit from the combined risk as opposed to over funding for the extreme cases. Probably wouldn't be politically feasible, though.

[Chuckanut]

Quote:

Originally Posted by Fermion I do not like the way some states exempt pensions from state taxes but do not exempt 401K distributions. This type of inequality just fuels the hate.

Alas, it is part of the games that gubmint plays to reward certain groups and industries at the expense of others. Our tax system is loaded with 'loopholes' that benefit one group and sometimes, just one company.

Note the competition last year for the Boeing 777X plane. States were falling all over themselves to give various tax breaks and other advantages to Boeing. I wonder how the struggling small business entrepreneurs in those states felt about that?

[Chuckanut]

Quote:

Originally Posted by travelover It would seem that a portable pension or annuity that is actuarially sound would allow the average American to invest for their retirements and benefit from the combined risk as opposed to over funding for the extreme cases.

Silence travelover! Obviously, you are another one of the dangerous radicals who frequent this site.

[kyounge1956]

Quote:

Originally Posted by Mulligan Any retiree of a system that does allow double dipping within their pension system should be more outraged than anyone outside looking in. Although in my system you are restricted to 550 hours and no more than half pay, these double dippers are a detriment to the health of the pension system. They do not have the 14.5% contribution withheld, nor does employer then have to match with their 14.5%. If this was abused to any degree, the pension system would be starved of the additional monies needed to adequately fund the system.

Would it? They are simply getting the benefit they qualified for based on their salary and years of service prior to retirement. True, a double-dipper and the employer are no longer putting in their contribution and match, but unless the double-dipper's benefit is being revised upward based on their post-retirement earnings or additional service time while not contributing to the retirement fund, I don't immediately see how this would starve the system. Isn't the retirement system sending the same check to Retiree Smith whether Smith returns to work for the same employer, gets a job elsewhere or doesn't work at all?

If a retiree's benefits are being revised upward based on earnings/service time while not contributing, then I agree—it's an obvious source of underfunding that needs to be eliminated, just as spiking and other abuses need to go.