Budget Proposal for Federal Retirees

[ERD50]

Quote:

Originally Posted by W2R Yeah, it is awful what has happened with private pensions despite the protections of the taxpayer funded PBGC. I'd probably be furious and want to join a class action lawsuit.

What do you mean "despite the protections of the taxpayer funded PBGC"?

First - PBGC is not funded by taxes. Companies pay an insurance premium to the PBGC each year. Effectively, this is the employees money - in a free market that money would go to salaries (just one form of total compensation to another form).

And what has happened 'despite the protections'? Has the PBGC failed to provide the insurance guarantee that was contracted? Not that I'm aware. What are you saying?

-ERD50

[Amethyst]

Your facts are correct. Also, while not relevant to the Administration's plan, when FERS first came out, many CSRS people switched plans because at that time (1980's/early 90's) the idea of getting Social Security was appealing, as was the idea of contributing to TSP and getting Government matching. My husband and I debated whether we should switch (especially me, as I am younger). At last, on the advice of a friend who we considered very canny about money, we decided to stay in CSRS. During the stock market boom of the 1990's, we questioned if we'd made the right decision.

During the last 20 years or so, CSRS was finally allowed to contribute 5% (with no matching), and eventually to the full IRS limit for 401K contributions (but still no matching). Now that was a really good deal, which made those of us who stayed with CSRS happy. But we still won't get Social Security.

Quote:

Originally Posted by evilanne I don't think they can do what is outlined in Trump's plan. All major changes to government employee compensation has applied to new employees, FERS, FERS-RAE (2013) & FERS-FRAE (2014). CSRS Offset employees had special rules for those that had a certain number of years under CSRS. The articles I have read on the plan and the current administration's comments reflect a total lack of understanding of the federal retirement systems as they seem to think that FERS is better than CSRS. Most CSRS employees paid 7% into their system; FERS employees paid in Social Security 6.2% + .8% = 7%. FERS pension of 1% per year is ~ half of the equivalent CSRS Pension. FERS gets no COLA until Social Security eligible at 62, the Supplement equals about 1/2 of the difference between FERS & CSRS Pensions. FERS Pension + Supplement = approximately 75% of equivalent CSRS Pension and not all employees qualify for supplement or retire later beyond the eligibility point. FERS COLA is decremented up to 1% if rate is over 2% for SSA & CSRS.

[Amethyst]

I thought W2R meant that PBGC, as a Federal agency, is taxpayer-funded. Terminology can get confusing.

Quote:

Originally Posted by ERD50 What do you mean "despite the protections of the taxpayer funded PBGC"? -ERD50

[ERD50]

Quote:

Originally Posted by Amethyst I thought W2R meant that PBGC, as a Federal agency, is taxpayer-funded. Terminology can get confusing.

It's not confusing in this case:

https://www.pbgc.gov/about/how-pbgc-operates

Quote:

PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.

-ERD50

[H2ODude]

State system here had long history of COLA's but they're not a given. Retired 6 years ago and there has been no significant change other than a .1% increase...woohoo. I really don't care because I never counted on this income in retirement planning (good advice, Dad). However, I feel for the many labor class employees who have experienced inflation last 6 years and had no adjustments other than SS. FWIW I think NC has one of best funded retirement funds. For my money I'd rather have it solid with no COLA but that's little comfort to someone trying to live on far less.

I know there have been admonitions about this thread NOT being about private vs public, but when I got out a private firm VP said our gov engineers were now making competitive salaries to theirs. Tend to agree (DS in private engineering so I know what's going on there) but after salary, it's a matter of do you want fairly certain DB pension or bonuses and a competitive DC pension? Looking back, in reality over my career I believe the portability of DC would have done me better but no regrets.

[kimcdougc]

DH has a small non cola pension. No government pensions here. With our government being over $19 trillion in debt....something has to give somewhere.

Should our government do what they promised their employees they would do? Absolutely, but when companies (including our government) spend more than they take in they have to do something to get back in the black.

You can't pay if the money isn't there (even if they - the government- spent your money when they shouldn't have). Just do the math.

Doesn't make any of it right or wrong. Just math.

I just feel for all the employees that did everything right and then get screwed.

[copyright1997reloaded]

Quote:

Originally Posted by kimcdougc DH has a small non cola pension. No government pensions here. With our government being over $19 trillion in debt....something has to give somewhere. Should our government do what they promised their employees they would do? Absolutely, but when companies (including our government) spend more than they take in they have to do something to get back in the black. You can't pay if the money isn't there (even if they - the government- spent your money when they shouldn't have). Just do the math. Doesn't make any of it right or wrong. Just math. I just feel for all the employees that did everything right and then get screwed.

I think there is a lot of emotion on this subject (even by the moderators) as it hits close to home for some on the board. But you are correct, we have a national debt that is out of control. The $19 trillion now exceeds the GDP of the country, and is $65,000+ per person and $165,000+ per taxpayer. And that doesn't include off-book obligations of the US government, which now totals close to $69 trillion.

The simple fact is that at some point in time, the system will collapse under the weight of an ever escalating debt load. Today, the interest payments on US debt are almost the same amount of money (give or take a couple tens of billions) as US government pensions, and that is with a low interest rate environment.

Look, I don't know if the budget proposal is "fair". I myself have had to deal with frozen pension plan. All I know that every proposal to somehow even begin to bring the growth in government spending under control is met with screams of cutting programs, killing children, and so on. Eventually it won't matter because the country will essentially be bankrupt (and those who think just because we are sovereign and may not declare bankruptcy that it wouldn't have the same effective result are fooling themselves). The question is whether we can cut enough now (somehow) or whether the problem continues to be ignored until our children are faced with it and a dramatically lowered standard of living.

I will say one more thing, and hopefully those who have government employment will take this in a constructive, positive manner. I have worked in one of those high paid private industry jobs, and now am working full time in a publish position (teaching). There is no question that my private industry job was FAR more demanding. In the high tech field, there is no such thing as a 40 hour work week, and for many of those 30+ years I worked an average of 60-65 hours per week non-stop.

[Amethyst]

When you can say you worked those hours on rotating shifts, you can come back and tell me I didn't work as hard as you did in "private industry"

Seriously, the button-pushing happens because every time we Federal employees/retirees are mentioned on this site, we get dissed as if we all had sinecures. I'm quite aware that some do. So do some private industry people (or else Dilbert wouldn't be funny - Wally lives, right? LOL) It would be nice if people at least qualified their statements, instead of the blanket disrespect.

Quote:

Originally Posted by copyright1997reloaded In the high tech field, there is no such thing as a 40 hour work week, and for many of those 30+ years I worked an average of 60-65 hours per week non-stop.

[Alan]

Thanks for the interesting discussion.

https://www.youtube.com/watch?v=gBzJGckMYO4