Pensions, the destroyer of economies ...

[Mark in Ottawa]

Since I am retired (federal Canadian) civil servant on a pension allow me to respond. In theory, government pensions are really supposed to be operated in the same manner as pensions in the private sector. That is to say, during your working life, a percentage of your salary (currently about 10%) and a matching contribution from the employer are placed in an investment account. The matching contribution is really part of your total compensation package except that it is not taxed. By the time you retire, the sum of your contributions, the matching contributions of the employer and the ongoing returns on the investment from this money is supposed to be enough to pay for your pension until you die. Obviously in some cases, people will die young and not receive all of the money and in other cases, people will live to 100 and receive more than the amount that they contributed. Actuaries calculate all this out and modify the contribution rates and the investment return assumptions to ensure that the amount of money in the total pot is adequate for all of the expected payouts.

Bottom line here is that the money being used for the pensions is NOT the taxpayer's money; it is the civil servant's money.

That's the theory. In many cases, however, governments control the pension money and seeing this large pot of cash can't resist using it now for current expenditures rather than investing it. In such cases, governments "borrow" the pension money and credit the pension account with a nominal interest rate rather than the rate that would be earned by investing it properly. Note that I said that they credit the pension account. Frequently there is no actual cash account. The cash has been spent. This means that when pensions have to be paid, they have to be paid from current revenues (i.e. taxes). In other cases the unions have been able to negotiate very high pensions without a compensating increase in contributions so that the account becomes underfunded and in some cases governments have declared a contribution holiday for themselves thereby putting the account into deficit.

In the case of my pension, my understanding is that the Canadian government has been investing the funds properly and the actuaries have been keeping the contribution rates at the correct level so that there is enough money to pay our pensions. I will therefore continue to enjoy my pension, derived from my contributions over 34 years and not feel guilty about my enjoyment or worry about whether it will continue.

[Clark Howard]

Not to worry. Obama drastically cut Medicare for retired people. If you have not reached the age of 70 years, you will not have noticed that your health care provider has become slightly disinterested in your health complaints. Less health care means less time to pay retirement benefits. In addition, the Harvard MBA grads have found that they can offer generous pensions this year, which can be disavowed at a later date. Our government has decided that old folks need to be placated to prevent their ire at the polls, but it would be advantageous to get rid of them as quickly as possible. Regards, Clark

[Vern Humphrey]

Since I am retired (federal Canadian) civil servant on a pension allow me to respond. In theory, government pensions are really supposed to be operated in the same manner as pensions in the private sector. That is to say, during your working life, a percentage of your salary (currently about 10%) and a matching contribution from the employer are placed in an investment account. The matching contribution is really part of your total compensation package except that it is not taxed. By the time you retire, the sum of your contributions, the matching contributions of the employer and the ongoing returns on the investment from this money is supposed to be enough to pay for your pension until you die.

Here's the problem -- they take YOUR money and keep it under THEIR control. And they can do what they like with it -- including mismanage and squander it.

What's wrong with letting us keep our OWN money and manage it OURSELVES?

[togor]

Again, Vern, the problem is that most people won't save it for the later days. They'll piss it away or just conclude they need it and then they get to the end and they're too old or sick to work it's not there. What then? Hope the kids take them in? What about people with no kids for that? You know no poor people? How fortunate for you.

As for what the government did or didn't do with the tax money before paying it out as benefits. They didn't play the stock market, or real estate market, or other private equity markets. So we didn't have government taking significant positions that would attract collateral speculation, with people betting for or against the Federal government. That left treasuries. A lot to be said for that.

I would think you would understand that your personal experience is yours, that it doesn't automatically extend to everyone.

[Jiminvirginia]

Well.....I've been a Federal employee since 2003. Didn't go looking for the job really, never intended to work for the Feds, it just worked out that way. Doing work for the Navy, I can honestly say the folks I have worked with work pretty hard and earn the paycheck. Any job dealing with ships is tough work. I have no apologies for the pension system. It is what it is. If you have a real beef with it talk to your Congressional Rep. I'll say this, working near large defense contractors, I don't get near the money a private company equivalent gets and I sure don't get the hefty yearly bonus.

[Vern Humphrey]

Well.....I've been a Federal employee since 2003. Didn't go looking for the job really, never intended to work for the Feds, it just worked out that way. Doing work for the Navy, I can honestly say the folks I have worked with work pretty hard and earn the paycheck. Any job dealing with ships is tough work. I have no apologies for the pension system. It is what it is. If you have a real beef with it talk to your Congressional Rep. I'll say this, working near large defense contractors, I don't get near the money a private company equivalent gets and I sure don't get the hefty yearly bonus.

There are really two different pension systems -- the Federal system is not all that bloated. But states and municipalities are loaded down with pension debt, caused by two factors -- ever increasing union demands and poor management.

[blackhawknj]

The mantra that government employees accept lower pay in return for job security, secure retirement, etc. is part of The Party Line. A recent study in the UK found that government employees DO earn more than their private sector counterparts, on another board I visit a member noted that when working for the various federal agencies dealing the space program, military aviation, etc., while he did earn less than his private sector counterparts he never worried about layoffs, competing in a tight job market, age discrimination in hiring, arbitrary dismissal, etc.
And of course whenever there is any sort of emergency-bad weather, natural disaster, etc. we always her that "Government offices will be closed and all non-essential public employees are asked to stay home. "

[Jiminvirginia]

The mantra that government employees accept lower pay in return for job security, secure retirement, etc. is part of The Party Line. A recent study in the UK found that government employees DO earn more than their private sector counterparts, on another board I visit a member noted that when working for the various federal agencies dealing the space program, military aviation, etc., while he did earn less than his private sector counterparts he never worried about layoffs, competing in a tight job market, age discrimination in hiring, arbitrary dismissal, etc.
And of course whenever there is any sort of emergency-bad weather, natural disaster, etc. we always her that "Government offices will be closed and all non-essential public employees are asked to stay home. "

I personally have known at least three Federal workers who were told to relocate across country or leave Federal service when their jobs were restructured. And don't assume Fed jobs are bulletproof. Consider the Naval Shipyards that closed. Government shutdowns? Yes some got " free" time off. Others continued to work, or in some cases lost money. This happened to me.

[blackhawknj]

Several fairly high ranking Federal employees have told me transferring people inconvenient distances is one way to deal with duds and slackers and goof offs and people with an attitude problem.
Many blue collar employees found that they weren't technically civil service but were "subcontract" or "temporary" employees.