Many pensions are on the edge of disaster

March 01, 2017, 11:22 AM

quote:
Originally posted by 1967Goat:
Public defined benefit pension systems need to be eliminated. They should be forced to switch to defined contribution systems like the rest of us.

Sounds great in theory. Do you realize how much money that would take? The benefits that have already been earned by the retirees must be paid and how are they going to be paid if the contributions are not made into the pension? Like it or not we have a huge crisis that is not easily solved. Retireees have no social security to fall back on.

For the record the cases like the one jallen mentioned are not okay and I do not condone them nor do most public safety pension members.

Finally the pension benefits are sold as part of the package of benefits, in my city the lower pay rate was justified with the "great" (unsustainable) benefits. Most of the guys I work with are in this job because they love it and want to help people, however when you look at things like the insane cancer rate for firefighters it's causing a lot of guys to reconsider the department they work for. I would like the assurance that if I die my family would get the benefits that were promised to me.

March 01, 2017, 11:23 AM

Scoutmaster

quote:
Originally posted by MNSIG:....Anyone that signed on to the existing system did so with the expectation of receiving the pension. Not fair to pull the rug out. New hires are a different story.

But the laws of economics may well pull the rug out before there is time for a transition. So either public pension plans go bankrupt and public employees are screwed. Or gov't drastically increases taxes on the private sector, and those people are screwed (or move to another state).

As to a transition, a couple of years ago a liberal Bay Area mayor sounded the alarm re public pensions around here, the other liberal Bay Area mayors told him to shut-up.

March 01, 2017, 11:24 AM

SIG228

quote:
Originally posted by Deqlyn:
No surprise there. They will continually ratchet down pension payouts as thry are not guaranteed. If I werr a worker in any sort of a pension i would take thr lumpsum payout or go self directed from the start if it were an option.

I don't have one concern about my pension from the State of Utah. Zero, zilch, nada. Started collecting it at age 43 and hope I live to be about 110 and my wife lives to 120 (she'll get 70% even after I croak).

March 01, 2017, 11:25 AM

1967Goat

quote:
Originally posted by MNSIG:
quote:
Originally posted by 1967Goat:
Public defined benefit pension systems need to be eliminated. They should be forced to switch to defined contribution systems like the rest of us.

Perhaps phased out over time. Anyone that signed on to the existing system did so with the expectation of receiving the pension. Not fair to pull the rug out. New hires are a different story.

Lots of private companies do it...the one I work for did it. As you say, at first they stopped the program for new hires. Then, they forced all existing contributions to go to a 401k type plan. Then, they froze the date at which your highest salary was used for payment calculations.

Many employees have a 2 part benefit/retirement...The "defined benefit" portion and the "defined contribution" portion.

I am not saying it's "right" or "fair", but it's what business does. The current model is unsustainable.

I also found out recently that "volunteer" firefighters also receive a pension in many municipalities (mine included).

March 01, 2017, 11:25 AM

Scoutmaster

quote:
Originally posted by SIG228:....Yet they have spent how many billions on illegals? Anyone else notice the majority of the places where pensions are in trouble are liberal strongholds. Partly due to unions, but also piss poor management and robbing Peter to pay Paul for giving handouts to everyone.

That needs a repeat. I might edit your "giving handouts to everyone" and add "in exchange for votes".

March 01, 2017, 11:32 AM

Scoutmaster

quote:
Originally posted by hbabler:
quote:
Originally posted by 1967Goat:
Public defined benefit pension systems need to be eliminated. They should be forced to switch to defined contribution systems like the rest of us.

Sounds great in theory. Do you realize how much money that would take? The benefits that have already been earned by the retirees must be paid and how are they going to be paid if the contributions are not made into the pension? Like it or not we have a huge crisis that is not easily solved. Retireees have no social security to fall back on.

For the record the cases like the one jallen mentioned are not okay and I do not condone them nor do most public safety pension members.

Finally the pension benefits are sold as part of the package of benefits, in my city the lower pay rate was justified with the "great" (unsustainable) benefits. Most of the guys I work with are in this job because they love it and want to help people, however when you look at things like the insane cancer rate for firefighters it's causing a lot of guys to reconsider the department they work for. I would like the assurance that if I die my family would get the benefits that were promised to me.

I have seen numbers on the unfunded liability for social security, it is in the $50+ Trillion range, the next generation will get screwed. And in CA many public positions get quite competitive pay compared to the private sector (except for stock options), plus public positions get a much better benefit package.

So almost everyone, public or private sector, will get screwed. Two ways out are to die before the tsunami hits, or to have enough of your own private funds that you are independent of any retirement plan.

March 01, 2017, 11:36 AM

Scoutmaster

One last post. Sorry I am so wordy here. I teach college business/accounting in Silicon Valley, long term liabilities, which includes present value calculations, pensions, unfunded liabilities, is the topic this week. Class starts in an hour, I will now be quiet here.

But to FishOn, thanks for the OP and references, that will be the opening story for my classes today.

March 01, 2017, 11:38 AM

ChicagoSigMan

I am not intimately familiar with how the PBGC works, but I hope this is not the beginning of a huge wave of defaults that the US taxpayers will have to backstop.

March 01, 2017, 11:44 AM

hbabler

Thanks for the info scoutmaster.

We have huge problems to deal with that no one in power seems to care about.

March 01, 2017, 12:56 PM

Aquabird

The teamsters already took a huge hit when NAFTA went into law. It supposedly allowed truck drivers from north or south of the border to deliver a load to its destination anywhere in the U.S.
It cost a lot of jobs. That is one reason they supported Trump. He promised to trash NAFTA.

March 01, 2017, 01:34 PM

jimmy123x

quote:
Originally posted by JALLEN:
quote:
Originally posted by FishOn:
quote:
Originally posted by roberth:
In CO the state PERA is in deep water too, of course they expect the citizens to make up the shortfall thereby ruining the citizen's retirement plans.

Anything for the precious state workers, most of whom work for the state because they are too stupid and too lazy for the private sector.

Well that may be true for some state employees, but LEOs and Firefighters and other first responders? A LOT of hard working men and women are going to be royally screwed by poor planning.

Some will be, but in San Diego, a great game was uncovered where fire department guys were swapping jobs around to maximize the pension psyouts, something about the highest salary level during any ~3 month period in the last two years or something like that. It made a big difference in retirement pay, so the guys would swap jobs.

Another scheme was buying additional years of "service" for a flat fee, a fraction of its worth. I no longer remember the numbers, but you could buy additional years of service for retirement purposes so as to increase your retirement pay.

The publc employee unions dominate city politics, so the union negotiates these arrangements with their own menbers and sycophants. Neat!

That happens here too. Their pension is based off of 70% of what they made in their last year, so the fire and police give the guy thats retiring a million hours of OT. And say their salary was $100k, they're getting more than that from their pension, then some are even going back to work for a different municipality and make another salary......ridiculous.

March 01, 2017, 01:52 PM

rsbolo

People are given financial incentive to "game the system" and that's exactly what happens.

Politicians should NEVER be allowed to vote on their own financial, retirement, insurance, or other benefit. That should always put to a popular vote. (And it should require a 2/3 majority to pass.)

March 01, 2017, 01:53 PM

liner

quote:
Originally posted by jljones:
quote:
Originally posted by roberth:
Anything for the precious state workers, most of whom work for the state because they are too stupid and too lazy for the private sector.

AWESOME stereotype. Why not say something bad about gun owners? Maybe Jews?

I left an $70,000 a year job in the private sector to police full time for half that. And that was AFTER working both jobs full time for about six years.

Again, awesome stereotype you have going on there. You should be proud.

My wife is funding her MA state pension to the tune of 11% of her pay. Nothing precious about that- 11% is real money. She`s 30 years in and wont retire for another 10- yeah she started young and he college was paid for with Umass.

March 01, 2017, 01:58 PM

MNSIG

quote:
Originally posted by liner:My wife is funding her MA state pension to the tune of 11% of her pay. Nothing precious about that- 11% is real money.

It is. Most of us in the private sector have been saving like that with absolutely no guarantee of lifetime benefits.

March 01, 2017, 02:01 PM

bcereuss

quote:
Originally posted by MNSIG:
quote:
Originally posted by 1967Goat:
Public defined benefit pension systems need to be eliminated. They should be forced to switch to defined contribution systems like the rest of us.

Perhaps phased out over time. Anyone that signed on to the existing system did so with the expectation of receiving the pension. Not fair to pull the rug out. New hires are a different story.

However, it's not fair to me (the "taxpayer") to pay increased fees and taxes to fund someone else's plush retirement.

Don't care if it is a janitor, public works worker, bureaucrat paper pusher, fireman, policeman, county attorney, elected official...if you come after my money there will be a fight.

At some point, lumps need to be taken.

March 01, 2017, 02:08 PM

CD228

quote:
Originally posted by 1967Goat:

I also found out recently that "volunteer" firefighters also receive a pension in many municipalities (mine included).

And how much do they max out at per month? How many get vested and of the vested group, how many actually collect? How much money do you save on your insurance because of the ISO rating? How much money do you pay to fund the department and how much would you pay if it was fully paid municipal department?

March 01, 2017, 02:17 PM

liner

quote:
Originally posted by MNSIG:
quote:
Originally posted by liner:My wife is funding her MA state pension to the tune of 11% of her pay. Nothing precious about that- 11% is real money.

It is. Most of us in the private sector have been saving like that with absolutely no guarantee of lifetime benefits.

That's me, fully funding my 401k Max yearly. My point is she is funding her own Pension, to what extent I don't know but 11% is alot of money, especially to lose. I`d like to see what 30 years of her contributions would look like in an investment acct- she also funds a 403B.

March 01, 2017, 02:26 PM

MagnumU

No one is safe from the tsunami (except maybe for our "fiduciary" elected representatives). When it hits, tax increases and restrictions on 401k and other plans adopted for "fairness" will hit those who have saved.

It's not your money, "you didn't build that," and they will be looking for ways to redistribute it.

There will always be mischief when the benefits are realized today (votes in the public sector, profits in the private sector) and the costs (pension funding) are shifted to the future. For example, if the big three automakers (dating myself, a quaint expression now) had been required to charge the full cost of pension promises to the current year's bottom line, you would have seen different results.

March 01, 2017, 02:59 PM

hbabler

Many systems do not take overtime into account when figuring pension benefits.

Mine averages over three years, base pay, no OT, certification pay etc.

Also I pay into my pension at a mandatory percentage that is set to almost double soon.

March 01, 2017, 04:28 PM

1967Goat

quote:
Originally posted by CD228:
quote:
Originally posted by 1967Goat:

I also found out recently that "volunteer" firefighters also receive a pension in many municipalities (mine included).

And how much do they max out at per month? How many get vested and of the vested group, how many actually collect? How much money do you save on your insurance because of the ISO rating? How much money do you pay to fund the department and how much would you pay if it was fully paid municipal department?

The 1 example I know if is $2,400 per month. If he dies, it goes to his wife until she dies.

Interestingly though, the all volunteer fire dept is always looking for new recruits, but I've never heard of anyone advertising this benefit. I would almost expect them to advertise that they are paying a pension after 20 years of volunteer service. They would probably get more people to volunteer.