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Old 10-16-2016, 06:01 PM   #41
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When you fund your own pension, you understand just how much it takes.
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Old 10-16-2016, 07:19 PM   #42
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Thanks for filling in the legal details on how this can occur.

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Old 10-16-2016, 07:24 PM   #43
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CALPERS is huge and until now I didn't know they were in trouble.

My girlfriend has an interest and me thinks I will advise her to transfer to an IRA.

I do not trust pension plans.
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Old 10-16-2016, 07:32 PM   #44
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I think that is the risk the employees took. Just as she would have said before the issue arose that anyone could have gotten a government job and received a great pension too.

No pension is 100% safe. Public or private. It's not right, but unless there is some sort of claw-back provision, it is what it is.

The reality is, Governments receive plenty of money; they just prefer to spend it on other things than a pension program.
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Old 10-16-2016, 07:50 PM   #45
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I saw some paperwork they sent her, she asked for my advice.

She is divorced from her husband who is a CA Fireman.

CALPERS gave her some choices, take the dough (10% penalty, not 59.5), transfer to IRA or just leave it here for 6% forever. Six percent forever sounded good to me...

Now it doesn't sound good anymore.
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Old 10-16-2016, 07:52 PM   #46
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CALPERS is huge and until now I didn't know they were in trouble.

My girlfriend has an interest and me thinks I will advise her to transfer to an IRA.

I do not trust pension plans.
As a local agency, miscellaneous member of CalPERS, I have been collecting a small pension from CalPERS for around 10 years. I worked for a large local government in the 80's and easly 90's that has always paid its contributions to CalPERS and is in no financial danger of not doing so.

The crediting rate for contributions is high, around 7 percent when I was accruing, before I retired. Over time, that crediting rate may not be sustainable, and agency and member contributions may increase. That does not mean the system will fail.

I would NOT advise someone to pull their money out of CalPERS based on a headline story. Dire predictions for CalPERS' future have been circulating for many years, even decades. If you are nearing retirement age and you do/did not work for a small, broke member entity, you are likely better off leaving your contributions in the system and collecting the pension.

Do the math, and then keep a close eye on the health of the system. And, of course, save and invest in other vehicles as part of your multiple streams of income approach to retirement security.
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Old 10-16-2016, 07:59 PM   #47
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I saw some paperwork they sent her, she asked for my advice.

She is divorced from her husband who is a CA Fireman.

CALPERS gave her some choices, take the dough (10% penalty, not 59.5), transfer to IRA or just leave it here for 6% forever. Six percent forever sounded good to me...

Now it doesn't sound good anymore.
Sorry, I missed this. If she is close to retiring or at least to taking the CalPERS annuity, have her make an appointment with CalPERS to get them to do the annuity calculation. Then do the math. In general, most people are better off with the monthly retirement check.
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Old 10-16-2016, 08:04 PM   #48
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Thanks.

She is 51 and a half and has a split (divorce decree) of her husband's pension and I have no idea how this works. She is working as a sub in the CA public school system now.

I'm going to have to research this some me thinks.
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Old 10-16-2016, 08:16 PM   #49
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Did/does he work for a local agency or did/does he work for the state? Employees of local agencies are "miscellaneous members." Miscellaneous members are not eligible for CalPERS health insurance and some other benefits. Retirement ages and percentages also vary by agency.

I'm not sure what divorced spouses are entitled to, so my suggestion is to get as much information as you can about her account on-line. If she is entitled to an annuity at 50, go with her to a CalPERS retirement appointment and have them run the calculations.

ETA: Make sure CalPERS has a copy of the divorce decree. They need that to make the allocation.
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Old 10-16-2016, 08:34 PM   #50
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I'm sure they have it, that's why they sent her the paperwork. As I remember an annuity was not an option. She could cash out, transfer to IRA or leave it in the system at 6%.

He is a city/county fireman, she was a stay at home Mom after the first child and has not worked in the 15 years from first child to divorce.

I'll look at it again to be sure.
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Old 10-16-2016, 08:59 PM   #51
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There may not have been an annuity option when this came up if she was too young. It's worth looking into to see what the options are now. However, at a guaranteed crediting rate of 6 percent, I would be inclined to leave the money in until I had strong evidence that the pension system was failing. CalPERS is NOT Illinois.
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