Pensions, the destroyer of economies ...

[dogtag]

How can it possibly be economically viable to keep paying
government retirees their salaries until they die at some
ripe old age, possibly in their nineties. Having retired at
65, that means around thirty years of a very generous
wage for doing precisely nothing.
It doesn't take a genius to figure out that this is suicidal
fiscal policy, yet liberal politicians everywhere it seems
embrace it with seemingly no thought of it's long term
effect not only on the new workers who have to pay the
piper but the Local or State economy as a whole.
Numerous States here at home are pondering this dilemma
which they have created, and which does not appear solvable.
Brazil too is suffering from this, amongst other things, as
the article shows. The longer this goes on without attention
the worse it will become, but who's brave enough to suggest
what needs to be done ?

https://www.wsj.com/articles/im-totally-freaked-out-brazilians-weigh-a-farewell-to-paradise-1533211200

[Mike-B]

It is easy for the democrats to be generous with other people's money.

[bruce]

If the cost of pensions for state govt. retirees is to much of a burden for the taxpayer... let the taxpayer down scale their standard of living. It's that simple. It is owed. Let the states pay up. Pleading poverty is no deal. Let the pensions be paid as per what was agreed. Many of those retirees were paid and willingly accepted a lower wage for state work in return for the promised pension. If it comes down to someone being burned, stick the match to the taxpayer not the retiree. There is no difference in pensions being paid as agreed to govt. retirees and benefits, etc., being paid as promised to military retirees. Let the taxpayer pay what was agreed. In the future, if a state does not want to enter into an agreement to pay a pension, fine. That will be up front with the employee able to make an informed decisions about the wages/benefits offered. But, the idea that states/taxpayers can do a bait and switch by pleading poverty is completely without merit. JMHO. Sincerely. bruce.

[dogtag]

Sounds like Bruce is enjoying the fruits of his big fat pension
that no taxpayer agreed to but is forced to pay.
It's a government sponsored Ponzi scheme,

[barretcreek]

I'm too cheap to pay the toll, so allow me to wing it. Here, the state pension fund has two problems. 1) The assumption of unattainable returns, combined with inadequate employee contributions. 2) Hiring politically connected hacks, er thieves, to manage the state's pension assets.
Guaranteed to fail.

[JB White]

Hold on a second, Bruce is making a valid point. The retirees worked towards that pension the same as I did. The difference being I paid into my own off the top with a match dollar amount agreed upon by the contractors. Those amounts varied from contract to contract but the fund was paid into by the private sector. Then invested to pay out based on dividends.
The Government pensions are tax payer provided. A fund which has been tweaked and robbed by those in power over the years. The workers didn't do it. All they did was work for what was promised.

I was always told that my wages and benefits were based on what the market would tolerate. Now the taxpayer is unable to tolerate the Government pension system. It needs to change. Those who already earned their pension points under the old system should get what they were promised as planned.
How would you handle having the rug yanked from beneath you at 64 and six months? You can't recover from a loss like that.

[blackhawknj]

The problems with government employees pensions are:
1. The people who negotiate with the public sector unions are not owners with any stake in the matter but simply politicians who see these unions as reliable voting blocs. They are spending "other people's money." How many government employees worry about out-sourcing, their jobs going overseas, etc. When was the last time you heard of massive layoffs in the government sector ?
2. How many people-even at the highest levels of government-actually know anything about finance and money management ? There is a widespread belief that private and public sector money management are unrelated fields with nothing in common, the standard practice of governments at all levels is that the only way to solve financial problems is to raise taxes. It helps when you have no competition of course.
3. Pension funds-like Social Security-are used as piggy banks and are constantly being raided, fancy accounting footwork is used to mask that.
One of the few examples I know of regarding a political office holder who showed any real knowledge of money occurred during the New York City Financial Crisis in the mid 1970s. Arthur Levitt, the Controller of the State of New York and the man in charge of managing the state's pensions funds, refused to invest in New York City municipal bonds, he said he owed fiduciary duties to the beneficiaries. In other words, he knew a bad investment when he saw one.

[dogtag]

I thought it obvious JB that the subject was government pension schemes
not private ones.
And affordable pensions are one thing, but full salary ones are the problem.

My Father in law upon retirement was to get a half salary pension,
so just prior to retiring he had his salary doubled.
He worked for - guess who. local government.
But, he was my bride's dad so it was ok.

[JB White]

What ticks me off is politicians who serve a term or two here, a term over there, then another term wherever plus and collect three or more six-digit pensions putting in just 4 or 6 years at each. As a political servant they should get the highest one which negates the other two.

Exceptions would be certain individuals who put in 20 or so years to earn a pension. Then move to another department to earn another or part of one. So long as they plan it right those combined pensions might be over 6 digits...but they earned it. Say serve 20+ years for the State police then perhaps another 8 or 10 on a county level. They worked for it and they are not instant millionaires working for a living. Akin to collecting a military pension and another in the private sector afterward.
Job hopping around city hall doesn't cut it.

[Sandpebble]

Well I gotta say....anyone offered the deal and performs the requirements has it coming . Lets not forget recent history however when GW Bush was interested in putting the military pensions into something akin to... well a 401. Thats right... check it out before you flame. In my eye that would have put all that money out there as fair game for those smart enough to manipulate it away from its true recipients.

It give pause to ponder that the people who have earned their pensions ... rightfully so ...in truly socialist environments such as the PD FD Military State etc. whine the most about socialism .

Work 22 yrs ... paid for life.... whats that ? .... cradle to grave perhaps ?

As far as private company pensions go..... I have a friend who retired from the teamsters after 31 years... his pension has recently been cut 31 % ...

That is a pretty harsh blindside I'd say.... and I'd say that no matter the political party affiliation he may have .... he was one of us... not one of them.

[Art]

Observations of a Federal pensioner.

When I went to work for "Uncle Sugar" U.S. Federal employees were beneficiaries of a "defined benefit" plan which we contributed to and resulted, in my case, to a "defined" payout of about 2/3 of the average of my high three year salary after 26 years. As an LEO I could retire at 50 and would have been forced out at 57. The rational being that police and military work were young men's games. The maximum which you could receive was 80% after thirty-something years depending on your position. As I indicated; members of the "warrior classes," the military or police, were forced out early either by a cap on retirement at 75% after 30 years for the military, or mandatory retirement (now 57 years) for Federal LEOs. A lot of private companies, Dow Chemical, Exxon ect. had similar deals, mostly to keep the Unions at bay. Today there are virtually no private companies that have designated benefit plans. Like Dogtag says, it's too expensive.

Military personnel were the only Federal employees who contributed nothing financially under their "designated benefit" system mostly because in the Viet Nam era and earlier they made so little money, especially in the enlisted ranks.

Since 1986 U.S. Federal Civil Service Pensions have been "designated contribution" plans meaning they are not different than glorified private sector pensions in which the employee pays into Social Security and has some form of savings plan (401k etc.) matched in part by the 'gubmint. Beginning this year the military is going to a similar system which means the days of serving your "20" and drawing half pay for the rest of your life are over for them as well, though if you contribute the maximum, play your cards right and invest wisely you can actually do a little better than you would under the old plan. Frankly, it had gotten to the point that military pensions ($50 billion a year and climbing) were such a big part of the defense budget they were beginning to compromise the mission. The new system will save an estimated $10 billion annually in military systems.

The only difference between current federal and private company plans is the Feds obviously don't have stuff like stock options. My father-in-law retired from Exxon with a modest pension but well over 1,000 shares of Exxon stock . The dividends from that stock was a lot more than his little cash payout pension.

I'm a "designated benefit" Federal pensioner which means I contributed into a fund which was part of the Federal "piggy bank" at the rate of a bit under 8% of my gross at the end of my career. While the contributions were supposed to be taxed on the front end and not the back the 'gubmint has found a way to tax them (they've done that with Social Security as well.) Therefore the retirement "contributions" are taxed at both ends.

Congress Critters are on a modified Federal pension system that has a much shorter period of service required to draw the pension.

Nobody retired, then or now, on 100% of their salary as a pension in the Federal system, old or new. A lot of state pensions are more lucrative though.

If you think the Federal "bean counters" can't wait for the surviving civil service "designated benefit" people, who are virtually all retired now, to die off......you're right.

Obviously the Federal "designated benefit" plan was unsustainable. This was especially true of the military once it was professionalized and the salaries went way up immediately following The Viet Nam War. Our son made more in real dollars as a "buck" Sergeant in the current Air Force than a first Lt. would have under the old system when I went in in the middle '60s. He's a cop now but intends to stay in the reserves to pull that Air Force pension, especially now that he's "grandfathered" under the old "designated benefit" military pension.

Eventually I expect the congress to pass a law ending double or triple dipping - limiting folks to one Federal annuity. If you are eligible, for say, Social Security, a military pension and a civil service pension (I know people in that situation) you'll going to be told to pick one.

[Vern Humphrey]

The problems with government employees pensions are:
1. The people who negotiate with the public sector unions are not owners with any stake in the matter but simply politicians who see these unions as reliable voting blocs. They are spending "other people's money." How many government employees worry about out-sourcing, their jobs going overseas, etc. When was the last time you heard of massive layoffs in the government sector ?
2. How many people-even at the highest levels of government-actually know anything about finance and money management ? There is a widespread belief that private and public sector money management are unrelated fields with nothing in common, the standard practice of governments at all levels is that the only way to solve financial problems is to raise taxes. It helps when you have no competition of course.
3. Pension funds-like Social Security-are used as piggy banks and are constantly being raided, fancy accounting footwork is used to mask that.
One of the few examples I know of regarding a political office holder who showed any real knowledge of money occurred during the New York City Financial Crisis in the mid 1970s. Arthur Levitt, the Controller of the State of New York and the man in charge of managing the state's pensions funds, refused to invest in New York City municipal bonds, he said he owed fiduciary duties to the beneficiaries. In other words, he knew a bad investment when he saw one.

As I pointed out, for about 10 years, I put the max into a 401k -- 15%. During the same period, I put 15.3% into Social Security (including the "Employer's Contribution" -- which was money I earned.)

Now the Minimum Annual Distribution for my 401k is $3,000 a year MORE than my Social Security and my wife's Social Security, combined. Imagine if I had been allowed to keep and invest that 15.3% for my entire working life!

[Vern Humphrey]

I have military retired pay (which is, per the Supreme Court, not a pension but "continued but reduced compensation for continued but reduced services.") I earned it, and I have the bullet holes to prove it.

Most pensions that cause the problems are state and municipal pensions, driven ever higher by unions. There are retirees in those systems who draw two or three times their annual working wage. And those ARE pensions -- that is, they are per the Railway Pension Case, property. They cannot be cut according to the Supreme Court.

[bruce]

[dogtag;534282]Sounds like Bruce is enjoying the fruits of his big fat pension
that no taxpayer agreed to but is forced to pay.
It's a government sponsored Ponzi scheme. With respect, you do not know what your are talking about. Sincerely. bruce.

[rayg]

I guess the choice was entirely up to you when you were young to seek out and try to get a job that was secure and had a good retirement pay out. Like those military. municipal, or state or government jobs or other secure occupations. That was your decision for you to make. If you didn't, you really can't complain about those that did. I finally smartened up and went after one of those jobs when I was thirty. Didn't make any were near that 70k, but between my retirement amount and SS, enough to get by..Also paid off my house 17 yrs ago with double payments per month to get the mortgage out of the way before I retired at 60 to help offset the reduced income.