A bill for a public pension reform advocated by Gov. Brown, and a commission appointed by former Gov. Schwarzenegger, has a labor sponsor, no formal opposition and therefore smooth sailing in the Legislature, right?
Not exactly.
The bill preventing CalPERS and county systems from lowering employer contributions when investment earnings are booming, and instead put excess money in a “rainy-day” reserve, shows how reform can be technically and politically complex.
Much pension reform legislation this year is scandal driven, responding to big salaries in the city of Bell, pay-to-play investment corruption at CalPERS and the boosting or “spiking” of pensions, notably by two Contra Costa fire chiefs.
Some of the bills are being watered down or delayed until next year — among them an anti-spiking measure, SB 27, that the California State Teachers Retirement System wants to change.
One of the few bills dealing with the big issue, pension funding, is the limit or ban on employer contribution “holidays” sponsored by the California Professional Firefighters, AB 1320 by Assemblyman Michael Allen, D-Santa Rosa.
“AB 1320 will ultimately safeguard against any sudden increases in employer contribution rates, thereby providing budget stability and sustainability,” said the firefighter group.
The bill is an expression of faith that the pension funds, now often only 60 to 70 percent funded, will one day return to financial health, despite dire predictions from reform advocates who urge major restructuring.
A provision in the original version of the bill also is a nod to the labor sponsors. The “rainy-day” reserve, if times were really flush, could be used to lower the pension contributions of employees.
The goal is a reserve to help government employers pay higher pension contributions when investment earnings falter, avoiding rate shock. CalPERS dropped employer rates to zero or thereabouts in the late 1990s during a stock market boom.
A state CalPERS payment that had been $1.2 billion dropped to about $150 million (as CalPERS sponsored a 50 percent pension increase, SB 400 in 1999). By 2005 the state rate had soared to $2.5 billion.
Schwarzenegger cited the dramatic five-year increase as he briefly backed a proposal in 2005 to switch new state and local government employees to a 401(k)-style individual investment plan.
An extreme example is the University of California Retirement Plan. The UC system, not included in the firefighters’ bill, went without contributions for two decades, getting by on investment earnings before payments resumed last year.
A UC staff report said the system, now planning to phase in a major contribution increase for employers and employees, would have been about 120 percent funded last year if normal contributions had continued since 1990.
The firefighters’ bill moved through the Assembly and the pension committee in the Senate with no opposition, other than “no” votes from minority Republicans in a Legislature bitterly polarized along party lines.
Then the board of the California Public Employees Retirement System voted this month to oppose AB 1320 unless amended.
CalPERS considered a rainy-day reserve in 2005. But as Schwarzenegger was backing a switch to 401(k)-style plans, CalPERS decided to spread investment gains and losses over 15 years, a rate “smoothing” period well beyond the usual three to five years.
Three bills that would have created “rainy-day” funds failed in the Legislature in 2005. But CalPERS left the door open to reconsidering a reserve after seeing how the extended smoothing period works.
A CalPERS analysis said AB 1320 should be changed to create the reserve outside of the main CalPERS investment fund, which is managed exclusively for the benefit of members. The reserve might have other uses and need different investment strategy.
The analysis said the bill could require about 122 of the more than 2,000 CalPERS plans to increase their annual payments by a total of about $2.9 million. The plans are overfunded and paying less than the normal cost now.
Tracking a reserve for each CalPERS plan could interfere with the launch of the first phase of a new statewide CalPERS computer system on Sept. 19. The analysis said the start date for AB 1320 should be delayed from Jan. 31, 2013, to July 1, 2014.
Amendments sought by CalPERS reportedly were added to AB 1320 late last week as the bill was kept alive by the Senate Appropriations Committee on a 6-to-3 party-line vote.
At the CalPERS board meeting, the bill was blasted as a state power grab of what should be under local control by Tony Oliveira, a former California State Association of Counties president and a local government representative on the board since 2005.
“I strongly oppose this probably more than anything that has ever come in front of us since I have been here,” Oliveira said. He added later: “If we think it’s necessary that you use Gestapo tactics,” the reserves should be in funds operated by local government.
Asked why the bill had moved through the Assembly and the Senate policy committee without opposition from local government groups, Oliveira said the measure may not be “hitting the radar screen” because their pensions are underfunded.
“I’ll say I suppose,” said George Diehr, the CalPERS committee chairman, “they are mute because for 95 percent of them it’s moot, hardly likely to become unmoot. It’s irrelevant for many years.”
Some advocates of pension reform are getting a professional analysis of complex initiative proposals from the nonpartisan Legislative Analyst’s Office. Democratic legislators want to raise the $200 initiative filing fee, unchanged since World War II.
Ted Costa of People’s Advocate said an initiative he filed with Robert Matteoli probably will be modified after a review by the LAO. An LAO review of three initiatives filed by a Santa Barbara organization helped them make a decision.
“We will probably go forward with the proposal to end public sector collective bargaining,” said Lanny Ebenstein, president of the California Center for Public Policy. The other two would extend retirement ages and tax pensions above $100,000 a year.
Ebenstein said the group is looking for funding to gather the voter signatures needed to place an initiative on the ballot. A Sacramento group, also looking for funding, has not yet filed its initiative.
“Things are getting closer,” Dan Pellissier, president of California Pension Reform said last week. “We will likely file in the month of September.”
Four Senate Republican legislators, who tried to get a deal with Brown on pension reform and other things in exchange for tax votes, introduced legislation in June for a pension reform ballot measure, SCA 13.
The measure, which has not been heard in the Legislature, is not expected to be filed as an initiative. Senate Republicans are pushing a referendum on new Senate districts, which could give Democrats the 27 votes needed to raise taxes.
When Brown broke off talks with the Republicans in March, he issued a 12-point pension reform plan, including a ban on contribution holidays. A news release said he “intends to introduce these pension reforms with or without Republican support.”
Five of the points were said to be “under development.” Among the complex proposals, yet to be revealed, is an option for a “hybrid” plan combining a lower pension with a 401(k)-style plan.
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 29 Aug 11
Calpensions 
August 29, 2011 at 5:52 pm
Missing, BEFORE discussion of increase taxpayer funding is the analysis of Public vs Private Sector “total Compensation” (cash pay + pension + benefits) for reasonably comparable jobs. As the US Gov’t BLS reports, with the exception of certain highly professional occupations (e.g., doctors, lawyers) Public Sector cash pay alone is modestly higher, and pensions & benefits are MUCH greater.
Paying greater total compensation to Civil Servants is unnecessary to attract & retain a qualified work force, and is grossly unfair to taxpayers whose contributions and investment earnings thereon pay for 80-90% of Public Sector pensions.
BEFORE we continue with “funding” discussions, we must first measure the extent of this excess … and REMOVE IT … by either (a) lowering cash pay, (b) lowering pensions & benefits, or (c) a combination of (a) & (b).
Roadblocks put in place by Civil Servants and their supporters MUST be met with a taxpayers refusal to fund these Plans any further. They must be appropriately reduced to remove the Civil Servant advantage or starved into failure.
August 29, 2011 at 6:46 pm
“Roadblocks put in place by Civil Servants and their supporters MUST be met with a taxpayers refusal to fund these Plans any further.”
Can’t be done as you propose, TL. Since when do taxpayers anywhere just get to decide which laws they will comply with? It’s certainly appropriate for everyone to use the political processes that have been established but, once used, we all still have to comply with the law and pay the bills created by either our legislators or by our tools of direct democracy, such as the initiative and referendum.
August 29, 2011 at 7:29 pm
That’s right TL, take your placard, and get out there, in front of City Hall. (Hope you got through Irene ok.)
I wish someone would do a study on the actual amounts that one citizen, in a particular district, pays toward the public sector’s pension payments. Last year, I viewed, a TV discussion, concerning NASA. It was told, that in response to a taxpayer- complaint, about having to pay taxes to fund that giant agency, a study was done to determine each American citizen’s NASA liability, for one year. The resulting amount was, one-half of one cent, per person.
You might pay a lot of taxes in NJ, but here in CA, we have Prop. 13. I pay taxes, right along with my private sector relatives, friends, and neighbors. There is no line item, on our tax bills, singling out specific amounts, for the pension payments. If such amounts are listed, they are the results of voter-approved, special taxes, in certain districts.
August 29, 2011 at 7:50 pm
LOL..he two trough feedign piglets making the usual bogus roadblock comments trying to keep their bacon wagon in hi gear,
August 29, 2011 at 8:15 pm
The reduction of pension payments to CalPERS and to UCRS when the market was high was a bad decision. I don’t think CalSTRS did that.
The contemporaneous threats by Gov. Wilson to skim the apparent surpluses from the those pension funds were also a bad decision… in the case of CalPERS, maybe money really was skimmed, I’m not sure.
Markets go up and down a lot even on 50-year time scales. An overfunding for 5 or 10 years is meaningless. But what looks like surplus money burns a hole in the minds of all of our politicians, including those who upped the pension benefits to 3%/y at 50y for safety, etc.
They way I’d run the system is: 8% of payroll from employees, 8% from employer, never changing. The never-lower portion of this proposal is good. Use Defined Benefit because the pooling is economical compared to Defined Contribution, so use Defined Benefit. Determine payout factors (ie, 1.5%/year of employment at 65y, etc) using the risk-free rates… about 4%.
If a fund is ever in surplus for 50 years in a row, take something like 1/3 of the average surplus and put in in small DCP accounts for all those in the pension system.
What’s missing from this proposal is a haircut for all pensioners. They have a binding contract, but I could never ask for tax hikes to pay for all the miscalculations and bad management of CalPERS and UCRS (I’m not sure CalSTRS had been as inept).
There is just no way to pay for everything that has been promised. Sorry. But just about the only fair way out is to give all State debt holders the same haircut… well, maybe pensioners could be means-tested.
One alternative might be to devise huge cost efficiencies in our medical care costs. Now I wish that were a goal of the University of California’s researchers.
August 29, 2011 at 8:24 pm
Skippy, We’re accelerating along that road of taxpayer abuse to fund these Plans for 100% of promised benefits. The Law, the Constitution notwithstanding, at some point (no sure exactly where that is), taxpayer funding will end (or certainly be capped).
You’ve said (and I completely understand) that you won’t support any actions that aren’t in your best interests … also understandable.
The flip side of that coin is that you SHOULD support actions that ARE in your best interests. While convincing Taxpayers to pay more would be nice, as they say, “good luck with that”. A rational, already retired worker such as yourself should be SUPPORTING lower pensions for future service of current workers. All but perhaps those very near retirement will never get what they have been promised, and you, getting all of yours is likely contingent on them getting much less.
I know you have wavered on this issue. I think you know it’s necessary, even if unfortunate for those who follow you. SeeSaw on the other hand is so blinded in what she perceives as loyalty to to Public Sector workers past, current, and even future (regardless of the cost or fairness to taxpayers), that she refuses to acknowledge the depths of the financial problem and the need for change.
August 29, 2011 at 8:37 pm
Quoting spension …”They way I’d run the system is: 8% of payroll from employees, 8% from employer, never changing.”
FINALLY, we agree on something. But I bet you didn’t know that the 16% total is sufficient to provide miscellaneous workers about half their current formula pension and less than a third for safety workers.
You see, to fully fund the current VERY RICH formula pensions requires that taxpayers pay from 3x to 6x MORE than the employees … and that’s blatantly unfair to taxpayers.
Oh (just noticed), if you value the liabilities at 4% as you suggest, the contributions get a LOT higher. 8% each wouldn’t even buy 25% of these excessive pensions.
The ONLY solution is a VERY significant pension reduction for CURRENT workers, or outsourcing just about everybody.
While I feel it fair that debt-holders share in the haircuts, I doubt it will happen. Witness what RI just did following Central Falls Bankruptcy filing (guaranteeing payment to bondholders …FIRST). You see, if you short the bondholders … you cannot borrow again …period…. and the State is dead.
August 29, 2011 at 9:55 pm
TL – I think there have clearly been some abuses that need to be corrected, and I agree that it’s in everyone’s interest to prevent anyone from gaming the pension systems in California or elsewhere.
Where we seem to part company is over your repeated suggestion that taxpayers have some ability to cease funding their existing obligations. That would make no more sense than me claiming I had the right to withhold some percentage of my income tax obligation because I disagreed with it being spent on an illegal war or to support some despotic foreign government – not that our country would ever do such a thing, you understand….
If you’re suggesting that civil disobedience is the proper response to government actions and obligations with which you disagree, then you are mining a long vein of American tradition, including such luminaries as Henry David Thoreau. But civil disobedience includes the obligation to accept the legitimate punishment for such an action, as demonstrated by Thoreau himself and reaching toward us at least through MLK.
It seems quite a stretch to believe people like yourself, or even the other anti-pension advocates who post on these blogs, would have the character and confidence of purpose to willingly commit unlawful acts in opposition to the pension obligations we have assumed for our teachers, police officers, firefighters, and other public servants.
I don’t think anyone will be your “Letters from the Newark Jail” for inspiration in half a century and, although you write far better than most on these threads, I doubt you have a “Crime and Punishment” within you.
August 29, 2011 at 10:11 pm
“Much pension reform legislation this year is scandal driven, responding to big salaries in the city of Bell, pay-to-play investment corruption at CalPERS and the boosting or “spiking” of pensions, notably by two Contra Costa fire chiefs.”
– Most, if not all, of the current pension reform is scandal driven. Why does it take a scandal before we see action? These problems aren’t new and would have only required policy changes if the unions didn’t control the entire process. When are bogus disability retirements that provide 50% tax free pensions going to become a scandal – so our legislators can call it a scandal and address the rampant fraud?
Addressing these scandalous issues, that EVERYONE knows exist, only demonstrates how ridiculous pension reform IS. These things need addressing, and should have been addressed many years ago (by CalPERS and others), but these reforms are only providing cover (camouflage) for the more pressing issue of a pension system out of control. The problem is absolutely structural yet these reforms are the equivalent of concerning ourselves with rust on a bridge while the foundation of the structure has almost completely deteriorated.
“Some of the bills are being watered down or delayed until next year — among them an anti-spiking measure, SB 27, that the California State Teachers Retirement System wants to change.”
– It amazes me that a Calstrs pension plan that is extremely under funded would be fighting an anti-pension spiking bill at the same time they’re preparing to ask taxpayers for more money. Get ready for more school program cuts to support a pension system in crisis. The next crisis; an under funded school system. More on this issue later.
“One of the few bills dealing with the big issue, pension funding, is the limit or ban on employer contribution “holidays” sponsored by the California Professional Firefighters, AB 1320 by Assemblyman Michael Allen, D-Santa Rosa.” (this guy is a union shill with baggage)
– A big pet-peeve of mine is the notion that there ever was a pension holiday. It did happen in many states but it didn’t happen in California, at least not in regards to CalPERS. Somehow the unions claim the deal they made with California, if you (taxpayers) give a huge pension increases and retroactive pension benefits we will use the super funded money in our pension fund (it is really “the“ pension fund) to reduce your obligation for at least the next decade. Well the pensions were increased but the “next decade” lasted about two-three years. By 2003 the CalPERS realized they couldn’t live up to their end of the bargain. In 2005, CalPERS increased our payment terms from 3 years to 15, thereby lowering the annual expense but drastically increasing the total cost, hoping we wouldn’t notice. In 2010, CalPERS extended the payment terms yet again. Pension Holiday? Absolutely not! It never was! And I’m tired of hearing about the non-existent pension holiday that is really the pension nightmare known as the CALPERS “smoothing policy” or “Rate Stabilization Policy”; in conjunction with SB400 (the pension giveaway policy that allows people to retire with up to 98% of their pay & pay perks as early as age 50.
The truth is the “super funded” status of the CalPers fund, in 1999, would have automatically reduced the pension contribution that cities were making. CalPERS smoothes both losses and gains at different rates. If SB400 (pension hikes of 50-75% would have never happened and the cost to the cities would have been reduced anyway. What really happened is that although taxpayers made the majority of the pension contributions, while employees made substantially smaller contributions and in some cases no contributions, the unions considered the CalPERS fund entirely their money. The thinking at the time, amongst the membership, was that if the pension fund was 132% funded that is our (their) money. They wanted it and they used their/Calpers lobbying efforts to get it. Now that pension plans are severely under funded it is our (taxpayers) responsibility to make up the difference.
I’ll finish later.
August 29, 2011 at 10:14 pm
Skipppy said …”Where we seem to part company is over your repeated suggestion that taxpayers have some ability to cease funding their existing obligations.”
What I meant was that when it get bad enough the taxpayers will demand …and somehow, the courts and/or legislature, will legally allow the reductions I’ve discussed.
August 29, 2011 at 10:18 pm
TL,
I left this messege for you on the previous topic but I’m leaving it here also:
“Captain, I just ran the impact (on funding requirements) of a 1% change in the interest rate through a spreadsheet I prepared.”
TL, below is a link to an article & video (that I promised) on the topic of cost per 1/4 percent decrease in the assumed rate of return. The presenter in the video is a senior CalPERS actuary. The video is five minutes and is pact with information. I recommend reading the article first and then watching the video. Some key points:
– the office of the actuary was likely to recommend a rate reduction to the CalPers Board (they did that. The recommendation was to lower the rate to 7 3/8 – 7.5%).
– Calpers changed their smoothing policy in both 2005 & 2010, “The purpose is to defer loss into future.” ( I bet CalPERS cringed when they heard this staement made it into the media)
– lowering assumed rate of return increses average employer cost by 4% of payroll for safety plans, and 2% for misc. plans.
Actuary: I’m sorry to bring bad news but that is the facts.
The article: California State Pension System makes Madoff Proud – Video Reveals Gimmicks Used to Hide The Decline In Their Assets
http://biggovernment.com/gmcgrew/2010/11/25/california-state-pension-system-makes-madoff-proud-video-reveals-gimmicks-used-to-hide-the-decline-in-their-assets/
August 29, 2011 at 10:25 pm
Skippy, Actually I’m much more of a finance guy than one likely to pen “Crime and Punishment”.
It’s also BECAUSE I’m a finance guy (AND very knowledgeable in pension design & funding) that I’m SURE we’re heading for a showdown … which can in short be summarized as … taxpayers WILL NOT pay the sums necessary to fund anywhere near 100% of promised pensions ……. and that’s for pension benefits ALREADY accrued.
My pleas to quickly address accruals for FUTURE service (to stop digging the hole deeper) doesn’t even address that problem.
August 29, 2011 at 10:57 pm
Skippy may not realize it yet, TL, but it is already happening. People are FED-UP and tax measures will go down. The first shoe to drop, without the incresed taxes – and we’re taxed out gazoo already, is that cities won’t have the funding to support staffing. Second tier pension packages only provide distant relief, good copy, at a hook to hang the union hat on. As a solution it gets a D.
It shouldn’t be this way, but the only way to save pensions for people like skippy is to force the issue.
I wonder what people like seesaw, skippy, and the many others like them would think about the CalPERS Board & Management if they didn’t have the taxpayer NET to save them from the risky “HIGH-WIRE” act that is CalPERS current policy?
August 29, 2011 at 11:11 pm
So we’re back to a prediction of a taxpayer ultimatum in which they somehow just refuse to pay their obligations? In the words of Colin Powell, I think you’ve overshot the runway on that one.
There will undoubtedly be hyperbole, threats, and assorted gnashing of teeth over the next decade about pension obligations as well as other government commitments. There will undoubtedly be changes made to public pension systems across the country. There will undoubtedly be changed made to the military pension system as well, since that one doesn’t even operate off a trust fund but works solely on a pay-go basis.
In the end, I suspect you’re correct that future government employees, civilian, law enforcement, fire safety, and even military will have some reduction in their benefits – at least until the next economic boom time arrives and they are able to lay claim to some portion of the wealth they help to protect through their service.
All of these things will take long debate, argument, and time to resolve, which continues to be one of the strengths of our system. Our legal system has protected contract obligations and individuals for over 220 years, including lengthy periods when even individual states were in financial default. I think that standard of performance is unlikely to change, even if the pressure to do so in the political or financial heat of the moment is great.
I make no claim to being a “finance guy,” but I did earn a graduate degree in business and understand how long-term financing plans work. I also understand that a 40-year horizon provides significant opportunities for short-term disruptions to long-term trends, but doesn’t usually change those trends in any meaningful way.
If you are of the “America is in decline and won’t recover” school of thought, I suppose a focus on worst-case outcomes makes sense. I don’t think history supports your position, but I suppose we’ll both have to wait and see how this plays out over the next business cycle.
As a closing thought, I would only suggest that SeeSaw has demonstrated far more prudence and thought than most people I’ve seen posting here or on the Orange County Register blogs. Given the perpetual grief she receives from some of the posters there, I think her occasional stridency demonstrates commendable restraint. Even you would have to agree that her posts are often the most sensible part of many exchanges we all have.
August 29, 2011 at 11:18 pm
Captain – The fact that CalPERS is backed by “the full faith and credit of the state…” won’t change during our lifetimes, so your rhetorical question is no more relevant than asking how you’d feel if your Treasury Bond was suddenly not backed by the full faith and credit of the U.S. The question itself contemplates an entirely different legal and social system than that in which we all live.
On a more practical note, our taxes remain among the lowest of the advanced world, even when you include both state and federal revenues. Even in California, our taxes remain relatively low because of Proposition 13 – which allows people like me to continue paying $4000 per year in property tax while my neighbor is paying something on the order of $12,000 for exactly the same services.
That discrepancy is where the ignition point will be, at least in our state. If you’re in the same boat as me (pun intended) get ready to have your property tax increase in the next few years to cover the services you want as well as those you’ve already received but haven’t paid for.
August 29, 2011 at 11:24 pm
Come on, Captain — You’ve stooped to posting a Breitbart story as support for your untenable position?
Since Breitbart is nothing more than a proud provocateur of the far right wing, even you can do better than that for your sources.
August 29, 2011 at 11:25 pm
skippingdog Says:
August 29, 2011 at 9:55 pm
TL – I think there have clearly been some abuses that need to be corrected, and I agree that it’s in everyone’s interest to prevent anyone from gaming the pension systems in California or elsewhere.
===============
Skippy, can we change your name to Captain Obvious?
August 29, 2011 at 11:30 pm
Where we seem to part company is over your repeated suggestion that taxpayers have some ability to cease funding their existing obligations.
==================
Future benefits not yet earned are NOT “existsing obligations”.
Future changes to pensions can be changed anytime after the current contract ends.
I would lower public saftey pensions to a 1% multiplier for every year worked until it averaged out to 1.5% per year, then I would cap all future years at 1.5%.
I would also lower public safety cash salary pay to the $40K-$50K salary range, which is the market rate for this unskilled/semi-skilled job skill sets.
August 29, 2011 at 11:30 pm
No, Rex. What is obvious is that you’ve either never learned or have forgotten how to engage in a civil discussion over a matter of disagreement.
Try it sometime. You might actually convince people that you’re a thoughtful and mature adult.
August 29, 2011 at 11:32 pm
Captain – The fact that CalPERS is backed by “the full faith and credit of the state…” won’t change during our lifetimes, so your rhetorical question is no more relevant than asking how you’d feel if your Treasury Bond was suddenly not backed by the full faith and credit of the U.S.
====================
CalTURDS is not backed by the state fool. They must get their funding from the member muni’s. If the member muni’s file BK CalTURDS does not get the deficient funding from “the full faith and credit of the state…” .
Another ill informed post.
August 29, 2011 at 11:34 pm
There you go again, Rex. No wonder you can’t hold down a job.
August 29, 2011 at 11:36 pm
On a more practical note, our taxes remain among the lowest of the advanced world, even when you include both state and federal revenues. Even in California, our taxes remain relatively low because of Proposition 13 – which allows people like me to continue paying $4000 per year in property tax while my neighbor is paying something on the order of $12,000 for exactly the same services.
======================
Skippy has more spin than the Maytag salesman.
You are such a liar it amazes me. California is the highest taxed state in the nation, anf the USA is one fo the highest taxed natiosn in the world, why do you think US companies are moving their corporate HQ’s overseas and to the middel east??????
BTW-if you want tp pay more for your property taxes there is nothing stopping you from cutting a check for double or triple the amount. I won’t hold my breath.
You should be thanking your lucky stars for your gov workfare, which allowed a GED educated clown like you to make 10 times what your market value is actually worth.
August 29, 2011 at 11:42 pm
“Come on, Captain — You’ve stooped to posting a Breitbart story as support for your untenable position?”
– Not so. If you actually read my comments you’d no I was refering to the video and the comments of a senior CalPERS actuary, Kung-Pei Huang. The only reason I linked the article is because it contained the video of the CalPERS actuary, and that has nothing to do with the author. The actuary’s comments stand on their own.
Maybe you should quit seeing things only as they fit into your little box?
August 29, 2011 at 11:58 pm
Captain,
For the sake of interested readers, my comment you referred to (from a discussion last week) was as follows (in the 4 brief paragraphs in quotes):
“Captain, I just ran the impact (on funding requirements) of a 1% change in the interest rate through a spreadsheet I prepared.
First, the impact on funding is not fixed (even for a given pension formula) but depends on the magnitude of the initial assumed interest rate. But for purposes of this discussion, for a 3%/yr formula pension with the worker retiring at age 55 with 30 years of service, a 1% change in the rate of investment return changes the level annual % of pay cost of the Plan by 9-11%
For a 2% formula Plan, a 1% change in the rate of investment return changes the level annual % of pay cost of the Plan by 6-8%.
Our %s are a bit different, but there is no question that if CalPERS return drops by more a than a very small amount (from the 7.75% they are now assuming), the actual cost to fully fund these Plans will increase materially.”
****************************************************
First, a few facts about my calculation (which I just checked):
(1) I assumed the retiree at age 55 would die at age 80 (just about the life expectancy of a male CalPERS retiree).
(2) the earnings rates are the same during the accumulation and payout periods
(3) The cash pay of this employee is assumed to have doubled (in REAL, not inflated dollars) over his 30 year career.
(4) Since this calculation is for a single employee from date if hire to date of death (over a 30+25=50 year period), no unfunded liability is assumed.
Of course I have no idea what CalPERS actuary did, but I suspect his larger contribution increase (for a given % decline in the earnings rate) is primarily due the existence of that (quite significant) unfunded liability he is including. Noteworthy is, as MY figures show, that even in the absence of an unfunded liability to deal with, actual long-term investment earnings even a small degree lower than that assumed by the Plan has VERY large cost consequences to Taxpayers.
Or as I prefer to describe it …… CalPERS tendency to be aggressive in it’s choice of investment assumption (i.e., to pick too HIGH a rate) supports it’s (labor/Union/member controlled) Board’s agenda to do everything in it’s power to stop/delay needed pension reform, because exposing the much higher cost (by using more conservative, (or should I saw realistic) assumptions, would increase the costs to member cities now (rather than delaying those increases to future years), hence adding to taxpayer demands to reform pensions NOW.
August 30, 2011 at 12:02 am
Here’s the relative tax burden by state:
http://www.statemaster.com/graph/eco_tot_tax_bur-total-tax-burden-per-capita
http://mjperry.blogspot.com/2011/07/tax-burden-by-state.html
Here’s the relative tax burden by country:
Click to access 11s1361.pdf
At 26.9% total per capita tax, according to the Heritage Foundation, U.S. taxes are about the same as those in South Korea, and far below the vast majority of “first-world” countries.
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
Apparently you’re wrong once again, Rex.
August 30, 2011 at 12:03 am
Maybe you should quit seeing things only as they fit into your little box?
================
Con artists never chnage their spots.
August 30, 2011 at 12:07 am
Skippy, I was ready to comment on two of your posts but Rex has covered my points – and he is correct.
I’ll ask again skippy, “I wonder what people like seesaw, skippy, and the many others like them would think about the CalPERS Board & Management if they didn’t have the taxpayer Safety NET to save them from the risky “HIGH-WIRE” act that is CalPERS current policy?
Rex, I’m not sure what the “Captain Obvious” refrence is all about – maybe it has nothing to do with me?
August 30, 2011 at 12:08 am
Here’s another chart so you’ll be able to understand total tax burden a little better, Rex.
http://www.ekonomifakta.se/en/Facts-and-figures/Taxes/Taxes-and-GDP/Tax-as-a-percentage-of-GDP/
August 30, 2011 at 12:14 am
Captain – I’d think the same thing as I do about my TIAA-CREF retirement fund. I know I’m a long-horizon investor and will be riding the ups and downs of the market along with everyone else.
It’s certainly advantageous to me that my most lengthy employment had a defined benefit pension as part of my compensation, but I also have other investments and deferred compensation from non-government employers that I keep in the market as well.
I’m the first to be thankful for what I have worked long and hard to earn, despite what some others might wish were the case. That doesn’t mean I don’t feel some compassion for those less fortunate than myself, but we all live with the consequences of the choices we make in life.
August 30, 2011 at 12:25 am
Captain –
If you haven’t done so recently, you should review the investment allocation of CalPERS. I don’t think you’ll find it fits your description of a “risky high-wire act,” but recognize that you may be one of those people who think anything not stored in Treasuries or shiny metal is too risky for a pension fund.
The relevant portion begins on page 88:
Click to access comprehensive-annual-fina-rept-10.pdf
August 30, 2011 at 12:36 am
Skippy, I’ve already seen it.
August 30, 2011 at 12:36 am
Something from the Tax Policy Center for you, Rex.
http://www.taxpolicycenter.org/briefing-book/background/numbers/international.cfm
August 30, 2011 at 12:37 am
Skippy, Re your “tax-burden” chart, the countries at the top of that list generally have free education and free healthcare for all.
Even though is high-cost, it’s also high-fairness … everybody gets the same. The MUCH MUCH greater Public Sector pensions is an example of un-fairness that does not happen there.
So the “winners” (Civil Servants, and welfare recipients) here want to keep what they have and the losers (the taxpayers) want to change things …. no surprise there
August 30, 2011 at 12:43 am
Here’s the relative tax burden by country:
Click to access 11s1361.pdf
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Skippy, aka Mr Spin!!!!!!!!!!!!!!
Hey baby Eisntein, you do know there are MORE taxes than income and sales don’t you???????????????
Maybe your GED brain can find a “study” that compares ALL tax burdens vs only income sales and social security.
August 30, 2011 at 12:43 am
“(1) I assumed the retiree at age 55 would die at age 80 (just about the life expectancy of a male CalPERS retiree).”
TL, I agree with everything you’ve said. If there were an issue it would be this:
““The one assumption causing the biggest increase in rates for all plans is the proposed change in post-retirement mortality,” Milligan and David Lamoureux, supervising pension actuary, said in a report to the committee.
The average life expectancy of males increased by a full year, while the average for females increased 0.3 years.
At age 50, for example, the study found life expectancy for males increasing from 80.9 to 81.8 years and for females from 84.8 to 85 years. At age 65, males went from 82.9 to 83.9 years, females from 86.1 to 86.4 years.”
“Lamoureux told the board that the average retirement age has dropped a little — from around 60 to 59.5 or 59 for miscellaneous workers and from about 55 to a little more than 54 for police and firefighters.”
I expect this number to drop as more people retire under the enhanced pension formula.
link: https://calpensions.com/2010/04/21/a-second-calpers-rate-hike-for-employers/
TL, check back tomorrow morning. I have some things I want to share with you.
August 30, 2011 at 12:46 am
I’m the first to be thankful for what I have worked long and hard to earn,
===============
Except you didn’t “earn” it much less worked “long and hard”. You keep telling lies like we will believe them if you spin them enough times. Wrong.
You were GIFTED a 50% pension increase that was nothing more than outright fraud.
You do not work in a free an dopen markety, but a fixed scam set up. if you took your GED cop job into the real world, the free market, the comp would be $40K max.
August 30, 2011 at 12:47 am
I’m all for a national health system and “free education,” whatever that might mean. In most of those countries college isn’t the destination for the vast majority of their students, so I’m not sure how you can make that particular comparison.
We have free public schools, free or low cost community colleges, subsidized state colleges and universities, etc., so I’m not sure you’ve made a real distinction. We’d also have a national health insurance program in place, were it not for political opportunism.
So what is it you want, TL? Low cost and high fairness? If that’s the case we should have a much more progressive income tax and probably a VAT on services, since higher income people use a larger proportional share of things like accountants, financial planners, and lawyers.
The more interesting part of this discussion is the fact that you and the captain ignore the vast transfer of wealth, in the form of fees, that CalPERS makes to its various investment houses. You also ignore the impact of its $200 billion + investments in our overall economy. Aside from having a fight to the death with government employees over their promised pension benefits, don’t you think you’ll run into some very well placed and well funded institutions that like the current system perfectly well?
August 30, 2011 at 12:48 am
What other taxes would you like included in the comparison, Rex?
August 30, 2011 at 12:49 am
Rex, I’m not sure what the “Captain Obvious” refrence is all about – maybe it has nothing to do with me?
==============
Has nothing to do with you Cap, it is a reference to a person who makes note of a fact that is already widely known by all. Skippyu tends to make comments that are already well know facts.
Skippy telling everyone that we need to stop “spiking” is so obvious that he earned the title “Captian Obvious” in that above post.
August 30, 2011 at 12:50 am
Taxes as a percentage of GDP would seem to be the most accurate measure, Rex, and I’ve thoughtfully provided several charts that compare countries based on that metric just for you.
August 30, 2011 at 12:50 am
Rex, I want to share a few things with you also. It won’t be groundbreaking, but it is good info.
August 30, 2011 at 12:51 am
The more interesting part of this discussion is the fact that you and the captain ignore the vast transfer of wealth, in the form of fees, that CalPERS makes to its various investment houses.
============
The ONLY “vast transfer of wealth” today is the transfer from the poor and middle class to ther gov employees with HS diplomas who are “retiring” with $3-$10 million pensions at age 50.
August 30, 2011 at 12:58 am
I know it must be frustrating for you, Rex. You worked hard to get that BA in Sociology, did substitute teaching for awhile but just couldn’t comply with all the rules of having a real job, and now you just sit around and surf the blogs because you’re on a dead end path.
I’d be frustrated if I were you too.
August 30, 2011 at 1:02 am
Captain, Increases in life expectancy, called “mortality improvement” are far down the list of surprises to any actuary. Should an actuary “blame” unexpected mortality improvement as a cause of Plan shortfalls, that would charitably be called dishonest in a Plan as large as CalPERS, as their aggregate mortality will not differ materially from the average.
If a CHANGE in mortality assumption caused a material disruption, then they delayed making that change for too long.
Mortality improvement is steady and quite predictable with a vast body of experience studies to draw upon.
Now actions (or threatened actions) that reduce retirement ages can indeed impact Plan costs materially if (as I’m sure is generally the case) the per-year pension reduction for retiring early is less that the true actuarial cost. For each year a Social Security recipient retires before his/her “full” retirement age, there is a reduction in the payout of about 6%. In some Public Sector Plans the reduction is less than HALF that.
August 30, 2011 at 1:19 am
“Now actions (or threatened actions) that reduce retirement ages can indeed impact Plan costs materially if (as I’m sure is generally the case) the per-year pension reduction for retiring early is less that the true actuarial cost. For each year a Social Security recipient retires before his/her “full” retirement age, there is a reduction in the payout of about 6%. In some Public Sector Plans the reduction is less than HALF that.”
Just one part of tomorrows post. I’m not trying to be coy, just need the time to locate the info. I’ll try to do that tonight.
August 30, 2011 at 2:11 am
Skippy, I was a FT public teacher, and socialolgy is still a higher degree than anything you ever had. You could never be a teacher in a public school.
Both sub and regular teaching requires a 4 YEAR DEGREE. But Cop= GED. Big difference there.
You’re still a GED cop who has the brain power of a circus chimp Skippy, and nothing is going to change that, remember that Skippy.
Once again Skippy, without your gov workfare cop job you would be LUCKY to make minimum wage at WalMart.
August 30, 2011 at 2:12 am
BTW Skippy, I do not have a degree is sociology, but that degree is still light years ahead of you and your worthless, trough feeder, entitlement mentality background.
August 30, 2011 at 3:59 am
Couldn’t cut it at teaching, so now you’ve decided to turn on everyone in public service? Churlish, Rex, simply churlish.
I received my BA before I became a police officer. I returned to school for my graduate degree after I was promoted to detective, since that position allowed me to take regular evening classes without juggling shift work.
Sorry things didn’t work out so well in your life, but there always has to be someone in the lower half of any bell curve.
August 30, 2011 at 4:22 am
I don’t have to do anything, Rex. The bacon wagon is running along just fine.
August 30, 2011 at 4:34 am
“SeeSaw on the other hand is so blinded in what she perceives as loyalty to to Public Sector workers past, current, and even future (regardless of the cost or fairness to taxpayers), that she refuses to acknowledge the depths of the financial problem and the need for change.”
There is nothing blinded about me at all, TL. I am a member of CalPERS, and loyal to my group. Not they, nor you, nor anybody else, is dependent on me to dtermine whether or not change to the pension plan is needed. We have about 2,000 member agencies in CA, along with the financial experts at CalPERS to sort that all out.
Its strange, and quite disenheartening, that a self-declared, finance expert, and supposed dignified citizen, would refer to someone, who worked all their life for a living and followed the rules, and someone they have never met, as a, “Greedy pig”, and “Epitome of greed and avarice”. And, oh, the best blanket accusation of all, about public sector employee unions, a “Cancer on society”.
August 30, 2011 at 4:48 am
“Most, if not all, of the current pension reform is scandal driven. Why does it take a scandal before we see action? These problems aren’t new and would have only required policy changes if the unions didn’t control the entire process. When are bogus disability retirements that provide 50% tax free pensions going to become a scandal – so our legislators can call it a scandal and address the rampant fraud? ”
What do you consider scandal driven, where the unions are concerned. The unions were certainly not involved in the Bell scandal, or in any of the perported corruption in Vernon. The Bell scandal, was not general knowledge anywhere outside of that agency, until after the City of Maywood laid off its entire workforce, and outsourced the responsibility for all of its programs and services, to the City of Bell. A City of Bell PD employee had gone to the LA County DA, to whistleblow, about those problems, in his department, and the DA was not interested in following up. Nothing was ever done further, about complaints emanating from Bell, until action was finally taken by the former AG of CA, Jerry Brown.
August 30, 2011 at 4:56 am
“One of the few bills dealing with the big issue, pension funding, is the limit or ban on employer contribution “holidays” sponsored by the California Professional Firefighters, AB 1320 by Assemblyman Michael Allen, D-Santa Rosa.” (this guy is a union shill with baggage)”
Why would this bill not be in your favor, if it is sponsored by a union and a perported union shill?
A bill that I thought intriguing, was AB 89, which would cap the amount of salary that could be used toward the retiring employee’s pension calculation, at $245,000. It would allow any elite manager, who fall into this category, to continue on moving up the career ladder, and increasing his/her salary. Why is it that we haven’t heard comment on this bill from you and your ilk? Could it be, because the principals, who would be affected, are the high flyers, who have no connection with the unions?
August 30, 2011 at 5:02 am
Skippy, you have NO CLUE about teaching or public schools. You would never get an interview, much less be hired. You don’t have the education or skill set.
You were hired as a cop because you were in the military-that was your connection in. No military no getting hired.
I DOUBT you had a college degree before you were hired in GED copland. You most likely got a “Pay for your A” degree, if you do have one, at one of the local diploma mills like National University or University of Phoenix.
You are a trough feeding piglet with your snout so far in the trough you actually believe your own whoppers.
Like I said, you would be lucky to get hired at WalMart with your GED.
Truth hurts GED Wonder 😉
August 30, 2011 at 5:11 am
The truth must certainly have hurt your doggie feelings but, be that as it may, they probably need to be hurt from time to time.
Being a military veteran probably helped me a little bit, since I was familiar with things like rules, regulations, and chains of command. Those are all helpful things to be aware of in any organization, so it’s little surprise that someone with your apparent lack of focus and discipline would quickly run up against a supervisor or manager who wouldn’t put up with your whining and insolence.
Just think, Rex. If you’d only demonstrated some diligence and good judgment, you’d be nearing the time when your long years of effort finally paid off with a nice, guaranteed, lifetime pension from CalSTRS. You’d probably even get a retiree medical plan that had psychological service benefits as part of the package.
Instead, you couldn’t control your impulses and alienated everyone you can into contact with during your “teaching” days. Now, the days move slowly on and you’re left with nothing but your anger and resentment toward those who did what you couldn’t.
Yes, your life sucks, but it was all your own doing.
August 30, 2011 at 5:16 am
seesaw. your bacon waggon is running low on bacon, better store up some of those bacon strips, I have a feeling they are going to get smaller very soon.
August 30, 2011 at 5:17 am
Skipper, I was otherwise pre-occupied most of today, and had not read the entire thread, prior to my posts. Thank you, for the, “Thumbs-up”. It certainly helped to brighten my, otherwise, dark feelings.
August 30, 2011 at 5:25 am
Did Tough Love, (et; al) see the article today about how a first-ever audit of the Federal Reserve (ordered by Obama after he assumed office) uncovered about a Trillion in secret bailouts under the Bush Administration ? I realize this may not have anything directly to do with California pensions, but it is amazing to me as to how some of you people DO GO ON about this topic when the really huge tax payer dollars are paying social programs for corporations!
August 30, 2011 at 5:26 am
Skippy, you’re a GED dork who has lived life on the gov workfare wagon because you could never get a real job in the real world, you would have never been hired in any kind of job above minimum wage so you went the gov route, so embrace your failures, even knowing without your military connection into your gov workfare job you would not have been hired there either.
That is all you have, and it is really pathetic how you try to claim you “earned” your gravy train pension when in fact you were just one of the leeches, a barnacle clinging on, living life off the backs of the real workers, the private sector.
You never “earned” a multi million dollar pension, you stole it with fraud and scamming, off the backs of the poor and middle class. A leech.
Your wild claims and insults are water off a ducks back. Me and you both know you don’t have enough brainpower to add 2+2 and come up with 4. I have schooled you so many times I lost count. Just like I schooled you on the true compensation of Richmond Police and you ran off.
You were more than likely some dork cop who could not cut it as a detective and was stuck in patrol working graveyard shifts your entire career because you were-and still are- too dumb to ever get promoted past GED patrol.
Don’t hate others Skippy just because you could never cut life in the real world. At least you were never canned from your GED cop job-but that may have more to do with the artificial work environment in gov employment than anything else.
Go out and get a real job, stop leeching off others, build your self-esteem so you don’t have to try to lash out at others who have made it in the real world and who are more intelligent than you. Go back to school-a REAL school. Educate yourself GED Wonder.
August 30, 2011 at 5:28 am
Did Tough Love, (et; al) see the article today about how a first-ever audit of the Federal Reserve (ordered by Obama after he assumed office) uncovered about a Trillion in secret bailouts under the Bush Administration ? I realize this may not have anything directly to do with California pensions, but it is amazing to me as to how some of you people DO GO ON about this topic when the really huge tax payer dollars are paying social programs for corporations!
====================
Everyone knew about it-it was called TARP, and it bailed out Wall Street AND state governments-not just corporations.
Eveyone I know is against BOTH corprate welfare AND gov workfare, like Skiippy’s job.
August 30, 2011 at 5:33 am
Rex, run, don’t walk, to the nearest office of a mental health therapist.
August 30, 2011 at 5:52 am
It’s clearly too late for Rex, but I do sincerely love the thought of him pounding his keyboard while the veins on his neck stick out because his blood pressure has elevated to such a frenzied level.
I posted both the RPD contract and the City of Richmond pay scales for you, Rex. They provide absolutely no support for your claim that police officers there are making “$200k a year” in pay, so there was really nothing more to discuss with you.
If you’ve bothered to read the MOA and RPD pay scales, you’ll know that your claim simply is impossible and, therefore, preposterous – just like the vast majority of your other wild claims.
I’ve made out just fine in the real world, both as a law enforcement officer and now as a manager in a company with nearly 1,000 employees. My wife is also retired from government service and has a pension equal to mine, so don’t worry your little fuzzy head about us one bit.
There’s no way and no reason for me to prove anything about myself or my professional career to you, but you know I’m out here along with thousands of others who’ve made far better life choices than you. I’ll sleep better tonight knowing just how much our success gets under your skin every day.
You could have been a contender, Rex. Instead, you’re just a bum (with apologies to Tennessee Williams).
August 30, 2011 at 5:57 am
SeeSaw – Denada. Hope you had a good day.
August 30, 2011 at 2:27 pm
It is clear to everyone that Skippy is a trough feeding piglet who is so far in the trough he is no believing his own workfare whoppers.
Skippy, don’t worry, they have medication that may be able to help, not save but help, that GED tormented brain of yours.
Your hits off that crack pipe you confiscated has caused one too many of those mini brain cells you have to die, luckily for you in that unskilled cop you had not too many brain cells were needed.
Now run along little GED Wonder. This is big boy talk J
August 30, 2011 at 2:28 pm
Rex, run, don’t walk, to the nearest office of a mental health therapist.
================
You made me cry seesaw 🙂
August 30, 2011 at 4:10 pm
After reading all the posts on this message board, I’m left with only one clear cut impression; Rex needs to see a mental health professional. The arguments about pensions from both sides have good points, so there is no clear winner there. The only clear winner is the local psychiatric hospital in Rex’s community, that place will make a lot of money trying to fix Rex.
August 30, 2011 at 4:45 pm
TY “Not Rex”, aka Skippy!
Hey Skippy, I found a pic of you and your buddies this morning, working the taxpayers again;
http://t3.gstatic.com/images?q=tbn:ANd9GcRxwsR5WYq4ESTi1kKgNh_acr_XXJTBfP2Hl_wHSPbLjRJ1odJk&t=1
August 30, 2011 at 5:28 pm
It ain’t Skippy your moron.
There is more than one person who is fed up with you. Guessing anyone who has any contact with you can’t stand you in any way.
August 30, 2011 at 8:51 pm
Hi Skippy 🙂
August 30, 2011 at 10:51 pm
TL said: ““Now actions (or threatened actions) that reduce retirement ages can indeed impact Plan costs materially if (as I’m sure is generally the case) the per-year pension reduction for retiring early is less that the true actuarial cost. For each year a Social Security recipient retires before his/her “full” retirement age, there is a reduction in the payout of about 6%. In some Public Sector Plans the reduction is less than HALF that.”
– That seems to be the case in regards to CalPERS service credits (air time). In a recent report from CalPERS they state the cost of the plan, which was adopted in 2004, has been selling benefits for between 12 – 38% (23% average) below what’s considered “cost neutral”, and cost neutral contains the assumption of a 7.75% rate of return. They mentioned in a September 14, 2010 memo that the BOD would be taking action on the 16th, and that if the board adopted the new rates the current plan (now former plan) would be suspended “IMMEDIATLEY”, as it should be. Sounds good, right?
Well, I’m always a skeptic. In a September 9th article (2010) in the Sacramento Bee, John Ortiz (The State Worker) writes about the new rate increase for service credits. Was this an effort to inform members to file papers for the discounted “Air Time” of up to five years, for work never performed, which guarantees the 7.75% rate of return plus the discounted cost of the benefit ( seven days prior to the deadline)? Who knows? It was probably just a reminder.
In April 2010, some seven months earlier, The CalPERS Board was presented with the findings from the study regarding mortality rate increases and service credit costs. This was presented to the BOD that consists of at least six board members that were elected by CalPERS members/union members, many of which are union reps. My point is that the membership had plenty of advanced warning that purchasing these service credits (air time) was a no-brainer – and the taxpayers would make up the difference. As far as I can tell the CalPERS employees and members had 5 months of advanced warning to get their service credit request filed – hardly immediate.
You can see witch groups were undercharged the most here: http://www.calpers.ca.gov/eip-docs/about/board-cal-agenda/agendas/bpac/201009/item3b-0.pdf
I do not consider “air time” a structural issue regarding pensions. I do consider this issue just one of many that negatively impact the taxpayer, demonstrates CalPERS lack of responsiveness to known (probably) issues, and is representative of a flawed culture.
The second part of my comment will come a bit later – out of time.
August 30, 2011 at 11:01 pm
Captain,
The crediting of “air time” as well as the granting of early retirement at less than true actuarial cost is insidious and comparable to retroactively granted pension increases (e.g., SB400).
All of these create (when granted or elected) an immediate unfunded liability … and often very substantial even for a single worker.
August 31, 2011 at 12:21 am
“Captain,
The crediting of “air time” as well as the granting of early retirement at less than true actuarial cost is insidious and comparable to retroactively granted pension increases (e.g., SB400).
All of these create (when granted or elected) an immediate unfunded liability … and often very substantial even for a single worker.”
TL, no argument from me – I’ll leave that to skippy & company.
Here is the other issue I want to draw attention to. We keep hearing about how nothing can be done to reduce pension benefits for current workers. The benefit that “supposedly” can’t be touched is the pension formula. I do NOT agree with that and many others share my view. It seems to be the equivalent of an “Old Wives Tale” that has been repeated so often people view it as fact.
The argument that we here so often is that the formula can’t be changed (i.e. 3@50). My suggestion is, although I think 3@50 should absolutely be changed – as well as anything that pays more than a 60% pension for a career, that cities Immediately cut cost by reducing all the optional benefits that have been incorporated into literally every city contract in California.
Here is what I’m talking about; and I have NOT once in all my time following the pension issue heard this topic ever mentioned (nor have I mentioned it)! While the claim is pension formulas can’t be touched the components that enhance the pension formula can be removed by any city council concerned about doing the right thing. I’ll give you and example of what I’m talking about regarding the city I reside in.
The 3@50 plan (or any 2@ plan for that matter) all have the same language that base pension payouts on highest “One-Year Final Compensation” (actually the highest 12 consecutive months). The standard CalPERS plan is the highest 36 months, therefore, this highest 12 month deal is nothing more than an enhanced benefit that never gets scrutinized or makes it into a headline. But there is a cost associated to the benefit, right?
Yes there is, and I think you certainly understand but most people do NOT! The cost is, according to CalPERS, 1.8 – 2.9% of payroll for safety plans. That might not sound like much but it is. And that isn’t all, there is much, much more that is adding to the cost of out of control pension expense that is effecting: budgets, programs & schools, quality of roads, contributions to senior assistance, etc. It also has much to do with the constant cry from public employee unions to increase taxes…..but I digress.
There are other enhanced benefit costs as well. Here are the top two that have been incorporated into my city’s contract:
ONE YEAR FINAL COMPENSATION: CalPERS additional cost to the city/taxpayers is 1.8 to 2.9% of payroll.
EMPLOYER PAID MEMBER CONTRIBUTION CONVERTED TO PAY RATE DURING THE FINAL COMPENSATION PERIOD: CalPERS additional cost to the city/taxpayers is 3.5 to 6.7% of payroll.
Those numbers are for safety plans. The taxpayer cost for just those two enhanced perks is 5.3 to 9.6% of payroll. When will cities start reducing the pension add-ons? There are many more enhanced benefits that are included in city contribution rates.
August 31, 2011 at 2:35 am
Captain, formulas can be changed in the CB process. But, of course, you won’t see that happening, for current workers. Formulas are being changed all over CA right now, for future hires. Many of the amended plans, for new hires, have abolished the highest, one-year salary calculation, for the three-year average. Current employees would never go along with their formulas being changed. That would take legal intervention–which would definitely result in civil court actions.
No, the add-ons, or spiking, are mostly in the 37 Act County plans. CalPERS does not allow all those add-ons, that are prevalent in the county plans. PS (and miscellaneous) will not get all those add-ons, like overtime, and vacation time, from CalPERS. I don’t know what the big cities, who have their own pension plans do, regarding add-ons.
August 31, 2011 at 2:41 am
Captain, formulas can be changed in the CB process. But, of course, you won’t see that happening, for current workers. Formulas are being changed all over CA right now, for future hires. Many of the amended plans, for new hires, have abolished the highest, one-year salary calculation, for the three-year average. Current employees would never go along with their formulas being changed. That would take legal intervention–which would definitely result in civil court actions.
The reduction of “enhanced benefits” can be negotiated or imposed without touching the X@X pension formula. The problem with you seesaw is that you don’t have a solution. The good news; cities do not need your permission.
August 31, 2011 at 3:00 am
Captain, I’m assuming that you are talking about reducing the pension accruals associated with Future service for current workers. Reductions for accruals associated with PAST service is almost as difficult as reductions for those already retired. The latter categories will likely happen only if the money would otherwise run out with a high degree of certainty.
But don’t misunderstand me … by likely not touching the latter 2 categories, we are left with a HUGE HUGE problem, as the very significant “unfunded liabilities” we hear about are associated ONLY with PAST service accruals. Without question we immediately need to significantly reduce (by 50+%) the accrual rate for FUTURE service.
The primary pension amount “drivers” are:
(1) the “Pensionable” pay definition, which means what is included (base, OT, Shift differential, Misc allowances, vacation & sick payout, etc), and the period-length for calculation ( 1, 3 , or 5 years typically).
(2) the richness of the formula (2%, 3% per year of service, etc)
(3) the earliest “full” retirement age, meaning no reduction for early retirement
(4) the % pension reduction for each year you retire and begin to collect your pension before your full retirement age
(5) whether the multiplier in (2) above is level or increases at some age and/or service point
(6) the existence of post-retirement COLA increases, and the magnitude of caps, if any
(7) the ease of being granted a “disability” retirement and the specifics of that pension
From a cost standpoint tweaking any of them will increase or decrease the pension, and the Unions’ position always seems to be that NONE of them can be changed. Arguing any of this is pointless, as the State Supreme Courts will be the ultimate decider. FYI, a very thorough discussion of the legal ability to change pensions can be found here (he issue it much more comple than most realize, and varies considerably from place to place):
Click to access UniversityofMinnesota.pdf
That being said, there seems to be a consensus that Retiree Heathcare benefits are not protected and are fair game for reform. Where needed, this should be a first step in reducing taxpayer costs.
Simply stated, these costs MUST come down significantly. Unfortunately, the effort and time to do so (via legal challenges) suggest outsourcing as many employees as possible (75+%) might be the best course of action. This ends the “employment relationship” and with it all future growth in pensions and benefits.
August 31, 2011 at 4:16 am
“Captain, I’m assuming that you are talking about reducing the pension accruals associated with Future service for current workers.”
Yes and No. I’m not talking about the 3@50 accrual of 3% per year. While I believe that most of the issues in your point #1 can be eliminated from the pension calculation, I’m only talking about those points that are pension enhancements – an increase from the standard CalPERS 3@50 pension plan. It is only the standard plan that has the perceived protection, IMO. What I’m talking about, in regards to current employees, is reducing these taxpayer only costs:
ONE YEAR FINAL COMPENSATION: CalPERS additional cost to the city/taxpayers is 1.8 to 2.9% of payroll. The standard plan calls for 3 years
EMPLOYER PAID MEMBER CONTRIBUTION CONVERTED TO PAY RATE DURING THE FINAL COMPENSATION PERIOD: CalPERS additional cost to the city/taxpayers is 3.5 to 6.7% of payroll. Cities can contribute the employee portion without making it applicable to pension calculations.
Those numbers are for safety plans. The taxpayer cost for just those two enhanced perks is 5.3 to 9.6% of payroll. When will cities start reducing the pension add-ons? There are many more enhanced benefits that are included in city contribution rates.
Here is the link to the CALPERS “Optional Benefits” plan. If you find it interesting, as I have, you need to save it before it is removed from public view. The link:
Click to access optional-benefits-listing-2011.pdf
I hope you, Rex, and others take the time to review the CalPERS “Optional Benefit” costs. And I hope to get some feedback.
August 31, 2011 at 4:41 am
“Air Time” is a scam, no where to be found in the real world, only in gov.
DROP is a scam, no where to be found in the real world, only in gov.
Penions service credit for sick time, vacation time,. car an duniform allownace, all scams no hwere to be found in the real world.
We need to put ALL gov employees into SS, just like every person in the real world is forced to participate in.
August 31, 2011 at 4:54 am
I am already retired, Captain, and my City cannot touch my pension, even if they wanted to. Fortunately, most cities work through the CB process when seeking to change anything that concerns salaries and benefits. It is not incumbent on me to suggest any solutions to the pension funding problems. That is what we have the professionals for, and I will leave it to them.
August 31, 2011 at 5:03 am
“EMPLOYER PAID MEMBER CONTRIBUTION CONVERTED TO PAY RATE DURING THE FINAL COMPENSATION PERIOD: CalPERS additional cost to the city/taxpayers is 3.5 to 6.7% of payroll. Cities can contribute the employee portion without making it applicable to pension calculations.”
My employer paid portion was not converted to pensionable salary, at the time of retirement. I was shocked when I read where that occurs in a city, in SD County. I called CalPERS about it, and was told that this type of situation is strictly up to the employer–CalPERS just follows orders. I don’t have stats, but I doubt that this practice is widespread among the member cities. I think we would have hear about it, otherwise.
August 31, 2011 at 5:31 am
“My employer paid portion was not converted to pensionable salary, at the time of retirement. I was shocked when I read where that occurs in a city, in SD County. I called CalPERS about it, and was told that this type of situation is strictly up to the employer–CalPERS just follows orders. I don’t have stats, but I doubt that this practice is widespread among the member cities. I think we would have hear about it, otherwise.”
seesaw, it is widespread. As far as CalPERS just following orders goes, they are the one that provided the optional benefit in the first place. See “Calpers Optional Benefit Listing”:
Click to access optional-benefits-listing-2011.pdf
August 31, 2011 at 5:50 am
It is evidently an optional benefit that an entity can contract for–that must be what the CalPERS rep meant when he told me that they just do what the employer requests. I did not know of it, but, I doubt it is an option that is used by cities, in a widespread manner. It doesn’t appear to be an option that is widely discussed. It has never come up on any of the articles I have viewed on the main-stream sites. I just happened to see the news item on one of these PT blogs–I was shocked.
August 31, 2011 at 7:12 am
It is not incumbent on me to suggest any solutions to the pension funding problems. That is what we have the professionals for, and I will leave it to them.
================
You mean the same “professionals” who said SB400 would “not cost a dime” and ended up costing half a trillion dollars?????? Is that whom you speak of seesaw?????
Yes, they are the “professionals”.
My pet turtle could do a better job runnign CalTURDS than your “professionals”.
August 31, 2011 at 3:35 pm
I actually think 8% employer + 8% employee constant forever and 4% does a bit better than you say, Tough Love, mainly due to the `law of large numbers’, or, said differently, the fact that in a pooled pension those who die young subsidize those who live long, which is a good thing!
No doubt the payout is substantially below the current formulas.
BTW, the OASDI portion of Social Security gets, what, 6 + 6%, with the proceeds invested in Treasuries, risk-free (I guess). Social Security is quite progressive… those of us up at the salary cap up above $100,000 for life get quite a bit less (on average) than we pay in (including interest on our Treasuries).
So I’m sure 8+8 invested in the markets (these days, Emerging Markets, ha! Our pension systems support bidness in China!) will do substantially better than SS.
But I’m tougher than tough love on debt non-payment. Pension debt, Social Security debt, etc are no different at all than bond debt or obligations to contractors.
Debt obligations are debt obligations. If you can’t pay a pensioner you must not pay a bondholder or a state contractor. Everybody debt instrument should get equally screwed.
Argentina did it, Greece used to do it, Iceland did it. Sovereign default works. 5 years later investors forget and reinvest. Gee, in Iceland they’ve already forgotten.
Used to be sovereign states would just inflate away their debt. Pensioners got wise to that and put in cost of living provisions, and we all hold TIPS. Now our States just have to say it outright, they are only gonna pay 45 cents/dollar or whatever.
BTW, hilarious that Gov. Perry says Social Security is a ponzi scheme. I’d love to hear him say that all US Treasury Bonds (not just those held in SS) are also a ponzi scheme and see the reaction of the Chinese.
That our politicians are trying to distinguish among the types of Government debt is absurd.
August 31, 2011 at 4:56 pm
Rex, if you can’t come up with anything meaningful to disuss about pensions, you might as well begin devoting yourself to a new issue–like cooking or rock hounding–something that might give you pleasure.
The pros are going to continue running CalPERS–preferable to your pet. Today is the 31st. My voucher witll arrive today, like clockwork, as usual. I know it just gauls you–but that’s the way it is. .
August 31, 2011 at 5:00 pm
spension, You said …”I actually think 8% employer + 8% employee constant forever and 4% does a bit better than you say, Tough Love, mainly due to the `law of large numbers’, or ….. ”
While I say it’s woefully insufficient by examination of numerous spreadsheet scenario calculations (for which by training and decades of experience I’m well qualified to go), you say, you “think …”
So I guess we must conclude you must be correct. I’ll await publication of your book …”The world according to spension”.
August 31, 2011 at 6:47 pm
Well, tough love, how do your spreadsheets account for pooled pension systems, where thousands or 100’s of thousands of people (and their employer) contribute continuously, die at random times, and draw benefits continuously. A big statistical challenge.
Very, very different than a 401(k) account.
Risk is actually reduced by pooling, relative to a 401(k) account. If risk reduction weren’t true, no insurance companies would exist and everyone would insure themselves. And of course purchasing an annuity is not the same thing at all, because annuity companies take your money as profit if you die just after the minimum period, maybe 10 years… you lose big. That is why keeping the pool employer-funded evaded the issue of personal ownership and made a more efficient system. And the biggest pool of all is Social Security.
Of course if the managers of the pool aren’t the sharpest tools in the shed, or, if they are downright lazy or corrupt, hijinks ensue. That is where we are lately, although I don’t think Social Security has been mismanaged badly.
One of the hilarious stats mentioned often in pooled pension systems is how many working contributors are paying in compared to those drawing pensions (or SS). SS was mentioned recently as `only’ having 3 for every one drawing benefits. I wish every one of those comments included the sentence, `of course, in a 401(k), only one person is contributing for every one or two drawing benefits’. (Two when a spouse).
401(k)s have there place, but, mainly they get more people involved in overseeing their money and being aware of their retirement. Crass corruption is a little less likely, but jeez, the management fees are over the top in many 401(k)s.
A much more important number is the risk reduction caused in SS by the number of people pooled in the system.
August 31, 2011 at 7:46 pm
Spension, It’s amazing how picking up a few tidbits, quoting a few buzzwords, and misstating quite a few facts results in your becoming an authority on pensions, 401Ks and SS financing and sustainability.
August 31, 2011 at 9:02 pm
Ad hominem much, Tough Love? Easy to make random general criticisms, but you aren’t specific in any way that usefully advances anything.
Perhaps specifically describing how your spreadsheets account for the statistical challenge of a pooled pension system with many thousands or even millions of vested members would be actually useful.
August 31, 2011 at 9:33 pm
Perhaps specifically describing how your spreadsheets account for the statistical challenge of a pooled pension system with many thousands or even millions of vested members would be actually useful.
===============
All the employees have statistical mortality rates, after years of data and research, that is how CalTURDS makes their assumtions, no different than insurance companies that offer the EXACT SAME PENSIONS/annuities.
Except an real world insurance company pension/annuity would NEVER use a 7.75% discounted rate of return. Ever. There is no “guessing” and the number of “members” makes no difference, bei it 10 or 10 million. There is no “challenge”, these math PhD’s do this for a livign after spending thousands and thousands of hours on research to figure it all out.
And there is no beneift to “pooling” the fund money. The money is money, does not matter if you invest in 1 share of GM or 1 million shares.
August 31, 2011 at 9:35 pm
the management fees are over the top in many 401(k)s.
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Are you for real?????
You can invets in ANY index fund that are 100% free-no load funds. YTons out there, all perform at the market.
August 31, 2011 at 10:17 pm
I don’t support the 7.75% discount rate at all. It is unreasonably high.
The number of members makes a huge difference in planning for the `worst case scenario’.
Any one person has a 1 in 100 chance or so of surviving to age 95, and should plan for that if all they have is a 401(k).
The chance that all 100,000 people in a pooled pension system survive to age 95 is far, far less than 1 in 100. In fact, the probability is infinitesimal. In a pooled system the money/member really need only provide out to age 85 or so. Per member that is a considerable saving.
That is the risk reduction.
My spouse must keep his 401(k) in specific plans with much higher management fees than the Vanguard index funds I use. If he leaves his company then he can change, but not until then.
A private pooled pension could work just as well as a theoretical one; no need for CalPERS etc. I wish Vanguard ran one.
August 31, 2011 at 10:30 pm
There is no risk reduction. there is an average mortality rate for men and women and some liv elonger some live less. It all averages out. The risk is the same.
August 31, 2011 at 10:37 pm
Hey, I wonder where that trough feeder Skippy is today. I guess after I spanked him so hard-like a little baby- he has had enough.
He must really be upset that he gets called out so many times on his whoppers claims, and then has nothing left but to attack the messenger. But his insults are just water off the ducks back. I will call him out whenever he tries to spin his whopper lies, and all the insults in the world won’t stop Rex for laying the smack down on Skippy.
Poor old chap, just had a full on meltdown from my constant correcting him of his whopper trough feeding lies.
Oh well, maybe Skippy can learn some new skills, skills that don’t require him to live off of gov welfare or workfare 😉
August 31, 2011 at 10:55 pm
Quoting spension …”My spouse must keep his 401(k) in ……”
Spension is a woman … that explains it all !
August 31, 2011 at 11:22 pm
Not necessarily, TL…………Not necessarily…………..
August 31, 2011 at 11:29 pm
Spension is a woman … that explains it all !
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Well, we know it explains a lot about seesaw 😉
Of course goof ball Skippy only has a single digit IQ-so gender cannot make too much of a difference 😉
It is seperated more along the lines of public employees vs private sector employees, where the public employees have a much lower IQ and almost no common sense.
September 1, 2011 at 12:01 am
Rex, if there was not risk reduction, than pooled insurance would not exist. The probability that all of our houses burn down simultaneously is far far smaller than the probability that any one person’s house burns down. And that is why fire insurance is cheaper than everybody saving to replace their own house individually.
In the pension situation, the averages don’t change, however, the planning for the worst case does change. The worst case is not the average; the worst case involves an unlucky fluctuation. The probability of that bad fluctuation (per person) can be reduced by pooling.
In particular, there is about a 1% chance for any one person (give or take for female or male) of surviving until age 95 from age 65.
But the chance that all 1,000 or 10,000 or 100,000 in pooled retirement pension will survive from 65 to 95 is extremely tiny. So a pooled system need only plan for the average…. survival to 85, roughly.
The lower the discount rate, the bigger the savings. For a 0 discount rate a large pool saves (30-20)/30 = 1/3 over a 401(k). That is a big savings, or, for a given contribution rate allows a larger safe benefit.
September 1, 2011 at 2:43 am
spension, To the point ….. Calpers actuaries build ALL of what you have discussed into the Plan cost calculations via assumptions for layoff, salary increases, mortality, disability (and termination therefrom by death or recovery), investment return, discounting Plan liabilities, etc.
With ALL OF THAT “built-in” (i.e., the risk-sharing benefits you speak of) the taxpayer paid-for share of total Public Sector pensions are ROUTINELY 2, 4, even 6 times (for safety workers) greater than that of Private sector workers making the SAME pay, retiring at the SAME age, and having worked the SAME number of years.
With cash pay in the Public and Private Sectors the same for the vast majority of occupations (per the US Gov’t BLS) granting these MUCH MUCH greater pension (as well as much richer retiree healthcare benefits) results in FAR FAR greater Public Sector “total compensation” (cash pay + pensions + benefits). This is both unnecessary to attract and retain a qualified work force, is unjust, and grossly unfair to Taxpayers whose contributions (and the interest thereon) pay for 80-90% of these MUCH richer Civil Servant pensions.
The comparison of the merits of 401k vs DB pensions is interesting … but separate and apart from the FACT that via these extraordinary excessive pensions, we are unnecessarily overcompensation Public Sector workers.
September 1, 2011 at 3:09 am
spension said …”In particular, there is about a 1% chance for any one person (give or take for female or male) of surviving until age 95 from age 65.”
You make statements like this “off the cuff”, without knowing if they are true or even close to true. Your statement …. “give or take for female or male” …. shows an even a greater lack of knowledge.
To show just how bad a practice doing such is, I calculated the correct probabilities (separately for males and females) of a 65 year old surviving to age 95. Using a well established insurance industry mortality table, specifically, the 2001 “VBT Unismoke ANB – Ultimate” (short for 2001 Valuation Basic Table, Uninsmoke, Age Near Birthday, Ultimate Mortality), the probabilities are not 1% as you stated, but 6.59% for Males and 18.4% for Females.
While the points you make as to “risk sharing” are relevant in certain contexts, they are not relevant in the context of how expensive a pension is, and who pay for it.
Also, you should leave the presentation of specific math facts to real subject matter experts.
September 1, 2011 at 4:27 am
Tough Love… I agree that the pensions granted in the public sector are higher than were merited by the historic employer and employee contributions. Those points you are making are uncontested by me.
However, my view is that the only way to address the problem is Sovereign Default on *all* debt by California and other states. Pension debt is just as legally owed as bond coupons. 5 or 10 Years of hardship (like Iceland) and then clear sailing. Oh, maybe it doesn’t work due to some legality but that will take 30 years to make its way through our clogged courts anyway.
That the true 1% survival age is greater than 95 years only *increases* the effect I mention… the amount that needs to be saved for a pooled pension is even less than for a collection of DC plans, due to the effect you mention. So, if the 1% survival is 100 years, and if the discount rate is 0, the pooled pension (for equal benefits) saves approximately (35-20)/35 = 15/35 = 43%. Of course, for higher discount rates the effect decreases.
Thanks, Tough Love, for pointing out that pooled pension systems are even more economical than DC plans compared to my initial estimate!
September 1, 2011 at 4:47 am
Actually the Tough Love effect making pooled pensions more economical than DC accounts is even bigger… see the mortality chart at…
http://www.ssa.gov/oact/STATS/table4c6.html
The blended (male female) 1% survival age is actually even higher than 100… about 101.5… and the average life expectancy for a 65 year old is only 83.6 years. So pooled systems with huge pools are cheeper by (83.6-65)/(101.5-65) = 51% for a 0 discount rate.
September 1, 2011 at 5:02 am
spension …too much of a focus on one single peripheral issue (the merits of DB vs DC Plans) make it difficult to appropriately address the issue at hand…. the cost of Public Sector pensions and cost-split split between the workers and taxpayers.
September 1, 2011 at 2:42 pm
Which workers are not taxpayers? In any case, 8% and 8% is fine for me, and the big issue is how much pension benefit does that buy. Pooled pensions purchase more benefit than DC plans because they reduce risk, although CalPERS and UCRS veered off into ignorant and unsustainable territory. Meanwhile the rallying cry of `DC for everyone’ is similarly ignorant.
September 1, 2011 at 3:17 pm
spension, Pension reformers have (for the most part) wised up to all the tactics of the Unions and workers to delay/stop reform.
Noting that workers are taxpayers too is one of these tactics. For example, why does it always seem that Civil Servants always support (and sometimes RALLY FOR) HIGHER taxes ?
It’s simple, since Civil Servants represent only15% of taxpayers, while they will indeed pay more taxes, they will get far MORE than the incremental amount of taxes they pay ….. with most of it going to continue supporting their excessive pensions. The non-Civil Servant taxpayers get very little in return for THEIR incremental taxes.
Oh, and you said …”8% and 8% is fine for me” … Does that mean that you (I’m assuming you are a Civil Servant) are also willing to accept as your pension ONLY what that 16% total contribution will be sufficient to buy … and that Taxpayers are no longer the balancing item for Plan shortfalls ?
I doubt it. I’m also sure there isn’t a city manager in the whole country that wouldn’t jump at the chance of accepting such a deal in exchange for the mess they are in now.
**************************************************************************
And there you go …. back to the pooled stuff … an non-issue for this subject. Another taxpayer “diversion” attempt perhaps ?
September 1, 2011 at 4:21 pm
Tactics? The truth is… most workers are taxpayers, unless your work is in the religious sphere, you’re undocumented, or in poverty (when payroll taxes AKA Social Security contributions) are included.
Is it a tactic to pretend that workers are distinct from taxpayers?
The truth is the truth.
As to the current shortfall in pension benefits, as you well know, I’m (at the moment) in favor of complete sovereign default. Take all forms of California debt, including pension, bond, contract, etc, and short everyone by the same percentage. Within the pension systems I think the haircut should be progressive.
Get it over with, like numerous nations throughout history have done. Our government elected by us messed up, let’s get over it. OK, so the US itself has avoided sovereign defaults so far. An individual US `State’ might be able to do it… that is the meaning of `State’ after all.
And if you want tactical speculation… perhaps the rich bondholders are trying to make sure they get 100% payouts at the cost of pensioners. I think that is wrong. Everyone should get screwed equally bit by the poor financial decisions of our government.
I’m happy with 8+8, but I do believe that pooling that pension money is more efficient. DC plans are much more costly because they don’t spread risk… indeed, they reward those who die young, just like medical insurance. Pooling rewards the abstemious and healthful who live long.
Ad hominem comments are irrelevant, Tough Love. I’m not a civil servant. My own DC plan balances are in the top couple percent for my age, but a few years ago I started trying to understand `how much was enough’ and gradually realized the pooled pensions are just a smarter solution, if they can avoid corruption and mismanagement. Personally I wish Bogle ran them all.
September 1, 2011 at 4:27 pm
From….
http://fabiusmaximus.wordpress.com/2010/03/05/defaults/
“States have defaulted 17 times (perhaps more), in many ways.
Eight States defaulted during the 1840′s. Four outright repudiations: Arkansas, Florida, Michigan, and Mississippi. Adjustments in Pennsylvania, Maryland, Illinois, Indiana, and Louisiana.
Eight States defaulted to varying degrees during the 1870′s and 1880′s: Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee, and West Virginia.
Arkansas defaulted on its bonds in 1933; but eventually paid all creditors in full.
Most of these were settled only after long battles in the State legislatures and courts (State and Federal), usually with partial payments (often long delayed). As a result there is a large body of case law on State defaults, which we might soon dust off and use.”
September 1, 2011 at 4:36 pm
spension …you said …”My own DC plan balances are in the top couple percent for my age, but a few years ago I started trying to understand `how much was enough’ and gradually realized the pooled pensions are just a smarter solution,”
The answer to you personal goal for sufficient retirement income and desire for the pooled benefits you discuss is (a) save, save save, and (b) when you retire, purchase an immediate life annuity sufficient to cover your BASIC needs … housing, food, clothing, and healthcare.
September 1, 2011 at 5:57 pm
Life annuities are a bad deal if you die just after the initial period when refunds are made for dying. If Vanguard offered an annuity I might consider it. But I am very wary of the fees and don’t trust annuity companies any more than I trust pension fund managers.
Here is what the Wall Street Journal says… each couple should save a minimum of $636,673 in their DC plans. That assumes they can withdraw 6.2% a year. In reality, current research says the safe withdrawal rate is 2.5% a year. So couples need to save $1,578,600 in their DC plans to retire.
http://online.wsj.com/article/SB10001424052748703959604576152792748707356.html?mod=ITP_pageone_0
Rarely are the hard numbers given, more common is just pithy advice of save, scrimp etc. And then our politicians tell us to go shopping (like after 9/11).
Now I bet the equivalent # for a pooled pension is closer to $1,000,000. But to evaluate that number well (including risk reduction and the effect of continuous contribution by young employees) is pretty hard.
September 1, 2011 at 7:38 pm
spension, (re your 5:57 time-stamped comment):
(1) Of course Life annuities are “a bad deal” if you die shortly after the purchase. Where do you think the benefits of “pooling” come from ? The Insurance company’s ability to guarantee lifetime payments for those who live well beyond their life expectancy comes from the savings from paying much less to those who die early. If you don’t want to risk that, you cannot benefit from pooling.
(2) Single Premium Immediate Life annuities are available from many sources with low fees. High fee products are the “deferred annuities”. Stay away from these unless you get INDEPENDENT advise on the purchase (not from the agent selling it to you).
(3) The “consensus” withdrawal rate (of financial advisers … google the “4% rule”) that can be supported by a balanced, well diversified portfolio of fixed and equity investments is 4% (increased by the CPI each year thereafter). Periodic review and adjustment is advisable no matter what you do.
(4) You say you aren’t a Civil Servant and “YOU” would be happy with an %8 contribution from each of the employee and the taxpayers to fund Public Sector Pensions. Guess what, so would just about EVERY non-Civil Servant. But ZERO Civil Servants would go along, because their pensions would be halved, or quartered (in the case of safety workers). You evidently have no clue just how expensive their Plans are. While the employee rate is FIXED in stone (and rarely more than the 8%), the Taxpayers are responsible for the full unknown balance to fully fund these extraordinarily generous Plans. Sometimes that balance (i.e., the contribution needed from Taxpayers) is in excess of 50% of the workers cash pay.
September 1, 2011 at 8:15 pm
(1)That is the flaw in the whole concept of DC plans. The better idea is that the employer pays it *all*, and so it is never *yours*. But for sure you should get a lower salary to fund the pool, and for sure delayed gratification is in general a good thing. But you are guaranteed a pension for life, and you can’t complain if you die young, since the big pool of $ was never yours to begin with. But DC plans ruin this whole line of thought… you start thinking of `your’ money. But since everyone must plan for survival until age 101.5 to be 99% confident, a *lot more* money must be saved by everyone.
(2)Yes, possible there are good annuities. If Vanguard offered one, I’d be interested. They don’t so I am skeptical.
(3)4% rules never worked for all countries in the world anyway, and lately it is in doubt for the US… actually I erred, and looks like the maximum sustainable rate for current retirees may only be 1.8%…
see figure 4 of http://www.fpanet.org/journal/CurrentIssue/TableofContents/CanWePredicttheSustainableWithdrawalsNewRetirees/
Now maybe annuity companies who counted on 4% will start to go bankrupt in the future. At least those won’t be sovereign defaults.
(4)I know current contributions are very high from government contributions (in CalPERS alone I think. I don’t think CalSTRS and UCRS as yet have those high government contribution rates, but they want them.). A huge mistake was made, to which my answer is: Sovereign Default. State sovereign default has happened at least 17 times in US history. My only point is to short all California debts equally. Maybe the only way to get all the unions on board is to get on with planning the apocalypse.
September 1, 2011 at 10:06 pm
spension,
You said …”The better idea is that the employer pays it *all*, and so it is never *yours*. But for sure you should get a lower salary to fund the pool, and for sure delayed gratification is in general a good thing. But you are guaranteed a pension for life, and you can’t complain if you die young, since the big pool of $ was never yours to begin with.”
That would work fine, but to have their “total compensation” (pay + pensions + benefits) no greater than their Private sector counterparts (an appropriate goal), AND keep their current level of Rich Pensions, their cash pay would likely have to drop by over 25% (More for cops).
September 1, 2011 at 11:43 pm
That would work fine, but to have their “total compensation” (pay + pensions + benefits) no greater than their Private sector counterparts (an appropriate goal), AND keep their current level of Rich Pensions, their cash pay would likely have to drop by over 25% (More for cops).
======================
I am telling eberyone right now, the cost to fund a scam and fraudulent 3%@50 public safety pension, where the pay raises are averaging 5%-10% per year is MORE than the take home pay of the employee, it iwe MORE than the gross pay of the employee.
It would take 125%+ of gross salary to fund such a pension in just 30 short years. IMO.
September 1, 2011 at 11:46 pm
(4)I know current contributions are very high from government contributions (in CalPERS alone I think. I don’t think CalSTRS and UCRS as yet have those high government contribution rates, but they want them.).
The contribution for CalSTRS is 8% from the teacher (never “picked up”) + 8% from the district + 2% from the state, and teachers have by FAR the most modest benefits of all gov employees (I have a CalSTRS account) and it is going BK right now-won’t last 30 even more years.
September 2, 2011 at 3:28 am
Odd that the government doesn’t greatly increase # of trained safety officers to drive down labor costs.
Get serious and start planning a Sovereign Default of the State of California to bring existing pension commitments back within reason. Might not work but a uniform default across all forms of State debt might be the most resistant to the court challenges. In today’s world investors will forget about it after 5 or 10 years, just like Argentina or Iceland.
I’ve not studied CalSTRS enough to know where they’ve gone wrong, but I know they didn’t take contribution holidays (like CalPERS and UCRS) and they have modest benefits. That paper I cited suggested 16% total contribution could cover the gap between Social Security and something like 70% replacement. But CalSTRS don’t get SS.
And SS is itself 12% (OASDI) total, so probably 28% is needed total. That might be the origin of CalSTRS problem.
September 2, 2011 at 6:39 pm
spension said …”Odd that the government doesn’t greatly increase # of trained safety officers to drive down labor costs.”
And how would hiring MORE safety officers (all of whom would expect to be paid, pensioned, and benefited as generously as current ones ……. which of course would be supported by the UNIONS so as not to devalue their current members) drive DOWN costs ?
September 2, 2011 at 8:27 pm
Supply and demand… around where I live, the Police/Sheriffs associations are forever arguing there is a shortage of qualified candidates. Flood the market!
Same for MDs.
September 2, 2011 at 9:44 pm
spension How absurd, there are ROUTINELY no less than 100-1000 applicants for each police/fire position that opens.
Also, have you considered that the Police/Sheriffs associations statements to the effect that “there is a shortage of qualified candidates” are self-serving, and would be said even (as is surely the case) it’s untrue … to justify a continuation of the need for their excessive compensation.
Wake you …. you’re being suckerde by the Civil Servants BIGTIME. As to whether Bondholders, etc. should also suffer a haircut (along with the HUGE pension haircut needed from Civil Servants) is a separate issue … which in no way diminishes the need to immediately address these pensions excesses.
*******************************************************************
September 2, 2011 at 11:55 pm
I disagree… see
http://online.wsj.com/article/SB10001424052748704132204576285471510530398.html
As for the haircuts, California debt is California debt, no dollar owed is any less or more important than any other dollar owed, unless already designated differently in State Law. That has nothing to do with Civil Servants.
The only reason to not lump all California debt together is if you have some favored class of debt holders you’re trying to protect, Tough Love. I say let all classes of debt holders get the same screwing in a Sovereign Default.
Not talking about Default plainly and simply is Orwellian doubletalk.
The only way to solve the pension problem is a Sovereign Default by the State of California. Saying anything else is rhetoric targeted in some way to protect the debt holders you like and screw the ones you don’t.
September 3, 2011 at 12:53 am
spension ….. you say you are not a Civil Servant.
But your extraordinary support to any (clearly need) pension reforms without, at the same time, addressing cuts to bondholders which are harder to make (because the state will no longer be able to borrow … and states simply cannot function w/o borrowing) …. STRONGLY suggest there is something in it for you, for a family member, for a good friend …. to delay/stop change and to keep this Civil Servant gravy train rolling along.
Well, it not going to work. These well deserved and needed changes ARE coming, and coming quite soon … and for CURRENT (not just new) Civil Servants.
September 3, 2011 at 1:04 am
spension … I though it was worth looking at your link (could you have a point ?).
Quoting from that WSJ link re correction officer positions) …”Over 120,000 people apply every year, according to the state Legislative Analyst’s Office, but the academy only enrolls about 900. That’s an acceptance rate of less than 1%.”
Clearly I see 120,000 applicants for 900 positions …. or 133 applicants for each position (right in the 100-100 range I mentioned).
How otherwise are you interpreting this … that ONLY 900 were qualified ?
Did you ever consider they had only 900 positions to fill and perhaps 25,000-50,000 (of the 120,000) were “qualified” ? There will always be the “best” 900. This hardly means that many many many more were not qualified.
This article does nothing but SUPPORT exactly what I was saying.
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You need to get the dust off you brain.
September 3, 2011 at 3:48 pm
So, Tough Love, your point is that increasing the supply of a resource does not lower its price?
September 3, 2011 at 5:08 pm
No spension, My point is that here is ALREADY 100 time greater “supply” ( of which at least 10% of which ARE “qualified”) by which I mean those available and willing to take all jobs offered … and ALL of the jobs offered (for which the hiring gov’t has the funds to pay for) are already filled. There is NO SUPPLY SHORTFALL.
You really should take a few courses in economics and finance.
September 3, 2011 at 6:08 pm
You don’t get to define who is `qualified’, Tough Love, and one way a supply shortfall is falsely maintained is through a shortage of those who are defined as `qualified’, for example, graduates of the California Prison Academy.
I say increasing the supply of those who are defined as `qualified’ will drive down salaries and benefits. I guess you oppose doing that, Tough Love.
In your world of economics reduced qualified somehow drives down prices. I don’t get it.
Nobody will allow Tough Love to make the call as to who is qualified, but we could shift all training of safety officers to the Community Colleges rather than the California Prison Academy, and qualify 10,000 people a year rather than 900.
Should also greatly increase the number of MD grads by increasing those programs.
September 3, 2011 at 6:48 pm
Out of 120,000 applicants for 900 positions (133 applicants per position), you don’t think there are way more than 900 qualified ?
Ok, I guess you are entitled to your opinion … no matter how absurd.
September 3, 2011 at 7:34 pm
Yes, it is my opinion that Tough Love does not determine who is qualified.
There is a process for defining qualifications through graduation from the Prison Academy or local police/law enforcement academies.
I’m advocating a takeover of that process so that many more candidates who have achieved appropriate qualifications are available.
Increase the supply so that costs go down.
I don’t understand why you think increasing the supply does not lead to a reduction in compensation, Tough Love.
September 3, 2011 at 9:51 pm
spension said …”I don’t understand why you think increasing the supply does not lead to a reduction in compensation, Tough Love.”
(a) Any FURTHER increase in supply is redundant .. there are ALREADY WAY WAY more qualified candidates than available positions, and
(b) Unions and the politicians in cahoots (“you-scratch-my-back-and-I’ll-scratch-yours”)
September 4, 2011 at 12:14 am
Unions and politicians are in cahoots…. to limit the supply of qualified candidates. That certainly is the case for safety hiring in my neck of the woods.
I’m saying flood the market with qualified candidates.
September 4, 2011 at 12:25 am
No spension, Will have almost no chance of getting Civil Servant compensation down … one reason for which is because …. “Unions and the politicians are in cahoots (“you-scratch-my-back-and-I’ll-scratch-yours”)”.
Need I spell it out clearer …………. it’s campaign contributions and election support in exchange for favorable vote on pay, pensions, and benefits.
September 4, 2011 at 1:39 am
Its all a scam- cops will always play the “public safety” card to get what they want!!!
September 4, 2011 at 4:12 am
There is a process for defining qualifications through graduation from the Prison Academy or local police/law enforcement academies.
I’m advocating a takeover of that process so that many more candidates who have achieved appropriate qualifications are available.
Increase the supply so that costs go down.
=========================
Most major LE agencies pay to put their employees though the academy. The academy is a one Jr College semester long, maybe slightly more, it is not difficult to complete.
There are TONS, and I mean TONS of men and women putting themelves though these academies and cannot even make it past an oral interview-and the reason is simple, the system is rigged. So it is not a lack of qaulified applicants oe people willign to do these jobs, it is getting hired in a rigged system.
As TL pointed out, CA had 125K applications for 900 prison guard positions in 2010. That is 140 job applicants per SINGLE prison guard opening is low compared to ff and cop, where there are easily 1,000 applicants for each ff job and 100-500 for each cop job.
As I have pointed out on these blogs many times, just about ANYONE with common sense and an IQ of 25 could do either cop or FF job, they are unskilled/semi skilled blue collar jobs. The hardest p[art is not doing the job-it is being hired.
These jobs go to insiders 95% of the time. And by insiders I mean family, friends, military and lawsuit consent decrees which virtually every major metro PD and FD in CA has been under at some point in the last 40 years. The LA Sheriff dept has been under a consent decree for over 30 years. How else do you explain guys like LAPD Chief Charlie Beck having 5-count em FIVE- family members workign in the LAPD when there are 500 applicants per opening????….do you have any idea of the odds of having 5 people from the same family being hired under those 500-1 odds? 10 Million to one.
September 4, 2011 at 4:13 am
Unions and politicians are in cahoots…. to limit the supply of qualified candidates. That certainly is the case for safety hiring in my neck of the woods.
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There is absolutely NO shortage of qualified candidates for public safety jobs anywhere in America.
September 4, 2011 at 4:22 am
Supply and demand… around where I live, the Police/Sheriffs associations are forever arguing there is a shortage of qualified candidates.
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Every GED cop and FF I know says this-and it is 100% false 100% of the time.
These are GED education level jobs that require NO PRIOR work experience whatsoever. Nothing. Nada/ Zero. It would be hard to find ANYONE who was NOT QUALIFIED under those requirements.
Why on earth would anyone claim there are not qualified applicants? To make the bogus claism they need to raise pay because there is a “shortage”.
I personally know people who do not smoke, drink or use drugs-ever- and have college degrees who were passed over for HS educated family or friends of the hiring personnel, people who DID HAVE SERIOUS criminal records-including drunk driving. So the notion that there are not enough qualified applicants is false, and has always been false.
There are in fact tens of throusands of qualifed applicants who cannot even make it through the oral interviews-which is where the fix is in on the hiring. They have oral interviews for a reason, to put the fix in, becausein the old days it was ALL 100% OBJECTIVE written testing. You cannot fix an objective written test, that is why the written test is long gone. LAPD Chief Darryl Gates was teh LAST LAPD chief to be selected by civil service exam.
BTW, what area do you live?
September 5, 2011 at 2:58 am
You guys are stubbornly not getting it… you are claiming you know that many `qualified’ candidates are not getting into the academies and through the process. I’m saying that `qualified’ means you get all the way through the process, and if that process is rigged or corrupt, blow it away. Wanking on about the distinction kinda shows you are, well, to put it bluntly, losers.
September 5, 2011 at 4:37 am
spension ….
Just about everything you say is ridiculous, and I’m guessing your purpose is to distract from the immediate need to significantly (by50+%) reduce the pensions of CURRENT Civil Servants.
I also believed this distraction is tied to self-interest .. somewhere even if you are no a Civil Servant. Perhaps you husband, another family member or good friend is.
September 5, 2011 at 6:27 am
I’m totally in favor of reducing *all* California debt payments (including pensions) by whatever it takes to get our budget sustainable.
I’m not in favor of selecting some California debt as `protected’ and other California debt as `defaultable’.
Tough Love, your ad hominem irrelevancies are ridiculous.
September 5, 2011 at 7:58 am
You guys are stubbornly not getting it… you are claiming you know that many `qualified’ candidates are not getting into the academies and through the process. I’m saying that `qualified’ means you get all the way through the process,
================
Getting all the way “through the process” has NOTHING to do with being qualified.
That is a ridiculous comment.
AS I stated, there are tons of qualfied applicants-how can there not be when a HS diploma is all you need, along with a clean record and no drug use-I know tons of people that qualify on that basis.
And once again, you’re not going to get “through the process” if you are not given the opportunity. And the only ones given the opportuniy are the connected few- how else do you explain 5 relatives of the LAPD Chief being hired when there are 500 applicants per opening.
September 5, 2011 at 2:49 pm
spension,
I noticed that you still won’t clarify that no family member of friend is on the receiving end of the Civil Servant gravy train.
Speak up.
September 5, 2011 at 3:02 pm
Rex, Another way to state what you said (and refute spension’s ridiculous comment) is that they city filled 900 position by picking from the 125K that applied. I can’t imagine they ruled 125K-900 as “not qualified”. They simply kept interviewing until they had 900 candidates (or perhaps more, knowing that some would not make it through) to send to through training. Some of those likely failed training and the process continued until all 900 positions were filled.
Tens of thousand of “qualified candidates” …to enter training … were certainly still available had more positions been available.
spension is either EXTREMELY “thick”, or as I suspect, is simply trying to distract the reader from the issue at hand …to immediately reduce pensions for CURRENT workers.
The diversion to discussion of “qualified candidates” bringing compensation down, and the need to reduce bond debt, while interesting subjects for another day, are simply intentional diversion tactics of Union supporters.
The focus of Taxpayers must remain ….. 50+% reductions for pensions of CURRENT workers….. or Outsource 90+% of all Civil Servants. This ends the “employment relationship” and with it all future growth in pensions and benefits.
September 5, 2011 at 3:58 pm
“Getting all the way “through the process” has NOTHING to do with being qualified.
That is a ridiculous comment.”
There is a supply bottleneck. I say blow it away and get as many ready-to-hire (not train, but hire immediately for a safety position vacancy) as possible.
Do all the the background checks, physical tests, psychological tests, etc at the applicants expense in junior college programs. Get is all out of the hands of existing politicians and safety union leaders.
Any family with 5 members in the same force should be banned, that is obvious nepotism.
If there is anything ridiculous it is Tough Love and Rex’s stubborn ignorance of the practical issues that must be addressed to actually drive down the salaries and benefits of safety employees.
The issue at hand is to get California solvent. Cut everyone with California debt. If you don’t agree with that, you have your head in the sand. Choosing `just pensions’ or `just people I don’t like’ will surely lose in the long run in the courts, but choosing complete sovereign default has succeeded 17 times or so in US history.
I don’t have a penny from any Civil Service system, pension, salary, nepotism, anything, from any US state, possession, for federal government or agency.
You guys are so ignorant as to confuse ad hominem arguments with those that grapple with the actual facts.
In the ad hominem domain, in all likelihood Tough Love and Rex are paid disinformation reps of the safety unions, other conservative groups, and the Government of China that want their debt from the State of California and the Federal Government to be honored 100% at the expense of other debt, like pension debt.
So Tough Love and Rex, say clearly you don’t have a penny in income or $ from any of those sources, and say clearly you are willing to default on *all* of California’s debt equally to get California solvent, or else you are ridiculous.
September 5, 2011 at 8:39 pm
spension, Not one penny from those sources ..satisfied.
And re your comment …”in all likelihood Tough Love and Rex are paid disinformation reps of the safety unions, other conservative groups”
That falls under the category …… when you have NO DEFENSE for you position, try an OFFENSE.
Sorry, It’s not working.
September 5, 2011 at 9:12 pm
Sorry, it works as effectively as your offensive ad hominem comments.
You do no want to actually achieve a much higher supply of qualified candidates for safety position. Ergo, you are supplying disinformation for the safety unions, Tough Love.
September 5, 2011 at 11:13 pm
spensions, Now That’s logical … I vocally support a 50+% redirection in pensions for CURRENT Civil Servants, and you’re accusing me of ….”supplying disinformation for the safety unions”.
You’re not very bright.
September 6, 2011 at 4:19 pm
But, Tough Love, what is your position on current SAFETY OFFICERS, and also currently retired California Pensioners of all types? How much should their benefits be cut?
Also how much do you say the salaries of current Safety Officers should be cut?
I doubt you’ll give a number, your paycheck from the Safety union and/or their lobbying groups depends on you not doing so.
You just can’t resist irrelevant ad hominem comments, can you?
September 7, 2011 at 12:25 pm
spension, The first order of business is to stop digging the (pension) hole deeper via a 50% reduction in the accrual rate for future years of service … from 3%/yr to 1.5%/yr. In conjunction with this, for any officers not ALREADY within 5 years of retirement, we should also make 60 the minimum retirement age with no reduction in the payout. For those retiring earlier, for EACH year below age 60, the payout reduction should be 5% (which is still lower than it’s true cost …. e.g., Social Security’s reductions are greater).
The above addresses pension changes for FUTURE service (as well as a retirement age increase).
Next, the formulas were increased from 2% to 3%/year in 1999 (SB400) and this increase applied to all years of service, including PAST service BEFORE the change. Although I know the issue has already been fought in certain counts without success, there was ZERO basis for the retroactive increase and it should be reversed.
Lastly, post-retirement COLAs should be eliminated permanently. Private Sector pension NEVER include such automatic increases, and neither should yours (primarily at Taxpayer expense)
Now ….. while all the police officers reading this either howl at the magnitude of the cuts I’m suggesting, or get a good laugh at the unlikelihood of such changes …………… remember, even AFTER such cuts, your pension would STILL be substantially greater than those of 90+% of taxpayers, and that such laughter is directed at Taxpayers whose contributions, (and the interest earnings thereon) pay for 80-90% of YOUR pension.
Instead of laughter, you should have SERIOUS concerns that the funds don’t run out and reductions will be even MORE substantial than suggested above …. and that reductions for those already retired and applied to already accrued pensions of those still active become necessary.
Finally, a SMART parasite makes certain not to kill it’s host.
September 7, 2011 at 1:29 pm
spension, Here’s another comment for your “ad hominem” plate ….
I think YOU are shilling for the Public Sector Unions.
Nothing else could explain your absurd comments and constant attempt to distract frpm the PRIMARY issue …. the need to VERY substantially (by 50+%) reduce pensions for CURRENT workers.
September 7, 2011 at 3:49 pm
Well, good start, Tough Love, to argue for reductions in future accruals.
Tough Love, you want *no reduction* in current pensions for retirees, Safety or other wise, *no reduction* in current salaries.
It is not going to work. We have already fallen off the edge of the cliff. Greece, Portugal, Ireland, Italy, Spain…. California. Sovereign Default is the only way out.
That is the true `PRIMARY ISSUE’.
September 7, 2011 at 3:56 pm
spension, I didn’t address current salaries.
YES, reduce them by 25%.
Do I think retirees DESERVE their full pensions ?
One side of me says that they fulfilled their “bargain” so yes. The other side of me say that since these pensions were not negotiated at arms length with someone at the bargaining table looking out for Taxpayer interests, so NO, they should be reduced.
So I’ll leave it as follows …. reduce them last, if there is no other choice.
September 8, 2011 at 3:49 pm
That’s where I think we are… no choice. All the responsible people have to maintain a brave face. Also in the social networks of State Finance, I’m sure the truthtellers are unpopular.
The only question is whether or not some holders of State debt will get more pennies on their owed dollars than some other holders.
My viewpoint: hold back the same portion from everyone.
September 10, 2011 at 6:03 am
“The more interesting part of this discussion is the fact that you (TL) and the captain ignore the vast transfer of wealth, in the form of fees, that CalPERS makes to its various investment houses.”
What about the vast transfer of wealth that CalPERS makes to their Pay to Play collusionists?
September 11, 2011 at 2:28 am
Sure there are fees, just like everyone else, the investment houses will take whatever they can.
I’ll leave that battle to someone else …. personally I’ll stick to what I know very well ….. educating taxpayers on how they are being ripped off via the extraordinary excessive pensions of ALL Civil Servants, excessive pensions (80-90% paid for by Taxpayer contributions ans the investment earnings thereon) which when added to CASH pay (equal to or greater than their Private Sector counterparts) results in “total compensation” far in excess of Private Sector workers and WAY more than necessary to attract and retain a qualified workforce.
It’s WAY PAST time for significant (50+%) reductions in pension accruals for CURRENT Civil Servants.
September 12, 2011 at 4:35 am
Tough Love Says:
“I’ll leave that battle to someone else …. personally I’ll stick to what I know very well ….. educating taxpayers on how they are being ripped off via the extraordinary excessive pensions of ALL Civil Servants, excessive pensions (80-90% paid for by Taxpayer contributions ans the investment earnings thereon) which when added to CASH pay (equal to or greater than their Private Sector counterparts) results in “total compensation” far in excess of Private Sector workers and WAY more than necessary to attract and retain a qualified workforce.
It’s WAY PAST time for significant (50+%) reductions in pension accruals for CURRENT Civil Servants.”
I always read your comments, appreciate your efforts, and am happy someone is finally telling the truth.
Thank You, TL.