A federal judge last week set a hearing on approval of Stockton’s plan to exit bankruptcy for next March 5. But the hearing could turn into a multi-day trial if the city can’t cut a deal with the last holdout creditor, two Franklin bond funds.
The plan to cut Stockton debt would pay Franklin $95,000 for a $35 million bond issue. A Franklin attorney, calling the cut “unprecedented,” unsuccessfully argued that the city had not disclosed enough information about settlements with other creditors.
U.S. Bankruptcy Judge Christopher Klein, ruling disclosure was adequate, gave Stockton permission to circulate the debt-cutting “plan of adjustment” to all creditors for a vote on Feb. 10. An objection from one creditor can force a trial.
The apparent failure of a court-approved plan of adjustment to solve structural financial problems in Vallejo is raising questions about whether the Stockton plan also might fail to close a long-term budget gap.
As in Vallejo, the Stockton plan does not cut pension debt. A Franklin attorney said last week an objection to the Stockton plan might point to the uncut pension debt as an example of unfair treatment of creditors.
Stockton contends that the plan does indeed cut retiree debt, mainly through the elimination of retiree health care, which is a large and growing cost in the troubled Vallejo budget.
Voters approved a 1-cent sales tax increase as Vallejo emerged from a 3½-year bankruptcy in November 2011. Now two years later Vallejo has a $5.2 million general fund deficit in the current fiscal year, projected to grow to $8.9 million next year.
Last week, Vallejo was not mentioned during the Stockton hearing. But the judge said the Stockton 30-year plan should disclose the “renewal risk” of a ¾-cent sales tax, approved by city voters this month but due to expire in 10 years.
“If I thought there was going to have to be another Chapter 9 (bankruptcy) case in 10 years, I probably would not confirm the plan,” said Klein. “I’m not sure any judge would.”
Large debt owed the California Public Employees Retirement System has been an issue in three city bankruptcies triggered by revenue losses during the recession. Whether public pensions can be cut in bankruptcy has yet to be tested.
Vallejo officials considered cutting pension debt, then chose not to try after CalPERS threatened a costly legal battle. San Bernardino skipped payments to CalPERS last fiscal year, running up a tab of about $17 million before resuming payments.
Stockton does not want to cut pensions, arguing they are necessary to remain competitive in the job market, particularly for police. Two bond insurers backing major Stockton bond issues unsuccessfully opposed the city’s eligibility for bankruptcy.
Assured Guaranty (backing $164 million in bonds) and National Public Finance Guarantee ($89 million) contended, among other things, that Stockton’s initial “ask” treated them unfairly because the largest creditor, CalPERS, was untouched.
Judge Klein asked the Franklin attorney last week if he similarly had CalPERS “in the crosshairs.” Jim Johnston said Franklin had been focusing on disclosure issues, but “CalPERS very well may be implicated” in objections to the Stockton plan.
The Stockton attorney, Marc Levinson, said the city understands that if it cannot reach an agreement with Franklin, there will be litigation over confirmation of the exit plan.
“So, we would just as soon get that started right away,” Levinson said. A problem for Franklin is that the loan collateral, two golf courses and a park, have use restrictions and are not regarded as vital by the city.
Klein said he “clings to the hope” that the mediator in Stockton’s agreements with the two bond insurers, U.S. Bankruptcy Court Judge Elizabeth Perris, can “work her magic” in the Franklin dispute.
40-year projection of general fund percentage spent on retirement
The Stockton plan said the city’s debt or “unfunded liability” for retiree health care in July 2010 was $544 million, far more than the CalPERS unfunded liability of $172 million. Eliminating retiree health care sharply reduced projected future costs.
(If Vallejo had ended retiree health care, the city might not have a $5.2 million deficit this year. A general fund budget adopted in June spends $7.1 million on retiree health care and $14.2 million on payments to CalPERS.)
The Stockton plan also projects major future savings from several pension reforms. Employees agreed to pay their full share of CalPERS costs, 7 to 9 percent of pay, ending a “pickup” of the employee share by the city.
New employees will receive a lower pension formula with no retirement credit for sick leave or optional benefits. Pay cuts of up to 23 percent, including some “add-pays” for police, will reduce the salary on which pensions are based.
With state pension reforms that took effect Jan. 1, said the plan, new Stockton hires arguably have a 50 to 70 percent cut in pension and retiree health benefits with no Social Security from city employment.
Current Stockton employees lose an estimated 30 to 50 percent of their retirement benefits from the loss of retiree health care, paying the employee CalPERS share and the cuts in pay.
To forecast future CalPERS rates, Stockton used an actuarial firm, Segal, and a change in CalPERS actuarial methods approved in April. Stockton also assumed two changes discussed but not yet adopted by the CalPERS board:
Higher costs from improved mortality rates and demographics and lowering the current investment earnings-based discount rate used to offset future pension obligations, 7.5 percent a year, by an additional 0.25 percent.
“Who knows, let alone CalPERS, what’s going to happen in 10, 20, 30 years,” said Levinson, the Stockton attorney. A municipal bankruptcy plan covers 30 years, he said, unlike three-year plans in business and individual bankruptcies.
A chart in the Stockton plan shows that retirement costs are projected to be near 20 percent of the general fund for about a decade. That’s around the level that prompted San Diego and San Jose voters to approve cost-cutting pension reforms last year.
The Stockton plan projects that from fiscal 2012-13 to fiscal 30-31 retirement costs will average 18 percent of the general fund — nearly the same as before the reforms when the average was 17 percent from fiscal 2008-09 to fiscal 2011-12.
“The net result of these changes is that the general fund is not going to be overwhelmed by retirement costs,” said the Stockton 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 Calpensions.com. Posted 25 Nov 13
Calpensions 
November 25, 2013 at 3:31 pm
If Vallejo had not given Police a pay raise in the middle of bankruptcy and then post bankruptcy missed the deadline to re-negotiate their contract they might not be in such a bad spot. IBEW in Vallejo gave up pay raises to ensure retiree health care, it’s already been cut to $300 a month – except for CAMP retirees whose cut was offset with a ‘cafeteria’ benefit. There are bigger structural problems in Vallejo than retiree health care; maybe you need to look at the woefully inept management of Vallejo before you start wagging your finger at retirees who ‘thought’ they were bargaining in good faith. The foregone pay raises would not have been as easy to steal as were retiree health benefits.
November 25, 2013 at 4:39 pm
The size of Stockton’s unfunded pension deficit depends on the discount rate of growth assumed by the actuary. In PERS that guess is 7.5%. But even the PERS termination discount rate of 4.82% is considered optimistic by actuary’s. Assuming the 4.82% rate increases the pension deficit by about 1.56%.
But PERS smooths losses over fifteen years. Most of the 2008-9 market loss has not been accounted for.
The Stockton plan is almost identical to the Vallejo plan. Filing for Chapter 9 without modifying defined benefit plans is in reality a “suicide 9.” Under reasonable assumptions, it fails. About 200 Ca. cities never adopted the 90% of final salary benefit and they recruit successfully. Who wouldn’t appreciate a 50% of final salary benefit?
November 25, 2013 at 4:44 pm
If the Plan is approved, Stockton’s spiral into a Detroit-style rat-hole will continue unabated.
Any REAL solution requires a structural change to the pensions (to get on going expenses under control), the BEST option of which is a DC (not a DB) Pl;an.
November 25, 2013 at 5:37 pm
The `BEST’ option *FOR TOUGH LOVE’s POCKETBOOK* is a DC plan, because he works in the financial industry that profits off the the fees charged to DC plans.
The best option for the best bang for the buck is a sensibly managed DB plan, like exists in many public sector organizations throughout the US. Just not California (and Illinois, Rhode Island, etc) where unreasonable benefits were promised for insufficient contributions.
November 25, 2013 at 7:15 pm
spension, I make no fees nor any commissions (directly or indirectly) from ANY type of investments. You just cannot cope with my solid reasons for an end to DB Plans.
The driver is the disguised (via collusion between the Public Sector Unions and our bought-off elected officials) EXTREME generosity of ALL (yes ALL) Public Sector DB Plans.
To prove it, I WOULD support any DB Plan where the expected DB Taxpayer contribution (with reasonable, but conservative assumptions) is no greater than what the typical Private Sector worker gets from his/her employer in DC (via4 01K Plan) contributions.
We BOTH know that the Public Sector Unions/workers would NEVER accept anything even close to that BECAUSE even the lowest-formula Public Sector DB Plan has a value at retirement (the Taxpayer paid for share of which) is AT LEAST 2 times that of the typical fortune 500 DC Plan, with the multiplier MOST OFTEN,(not 2x greater,but) 3x-4x greater, and 4x-6x greater for safety workers.with the richest pensions
The financial mess our States and Cities are in has never been one of “funding”. It has always been one of grossly excessive “generosity”….and “funding FOLLOWS “generosity”.
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And anyone who thinks that spension (or a family member) is not personally benefiting from the current DB Plan structure in Public Sector Plans is a fool.
November 25, 2013 at 9:08 pm
Once again– SPENSION hit the mark! I salute you sir or Madam.
November 25, 2013 at 9:32 pm
Stockton’s plan should not be approved by the court without changing pensions. Plans that do not result in a reasonable chance to stay out of bankruptcy should never be approved. It is not that Stockton did not want to change pensions, they simply decided they could not afford to fight CalPERS.
For example, Stockton now offers a 5% annual adjustment for pensions. Over the past several years of low inflation this adjustment has been giving unjustified pension increases. Assuming the low inflation environment continues as expected, 5% per year pension increases are clearly unsustainable.
Stockton did want to reduce the automatic pension adjustments. They asked CalPERS to make this change but were stonewalled. At the very least, the bankruptcy court should insist on this critically necessary change.
November 25, 2013 at 9:59 pm
The bankruptcy court should not approve Stockton’s bankruptcy exit plan without changing pensions. At the very least, the plan should reduce Stockton’s unsustainably high 5% annual pension increases. Stockton wanted to make this change but was stonewalled when they asked CalPERS. Note that most cities do not offer adjustments this high.
In the low inflation environment of the last several years, the 5% cola has resulted in unjustified pension increases. If low inflation continues as expected, this unsustainble cola will first force more public service decreases on Stockton and then put them back into bankruptcy. The bankruptcy plan should not be approved without this and perhaps other pension changes because it will not result in a reasonable chance that Stockton will be able to sustain services and stay out of bankruptcy
November 26, 2013 at 12:19 am
Altinks81, I’m guessing that you, by your call for a reduction in the in COLA increase percentage, you find the current increases unfair to Taxpayers … who pay for it.
I’m also guessing that you don’t fully realize the level of generosity of TYPICAL Public Sector DB Plans relative to the few Corporate DB Plans still in existence (noting that the DC Plans MUCH more common in the Private Sector are even far LESS generous).
The 3x-4x and 4x-6x multiple greater Public than Private Sector pensions I mentioned in my earlier comment are the result of 2 components: (a) MUCH richer formula factors per year of service, and (b) MUCH more generous Plan “provisions”.
With respect to (a) …… While a factor of 1.00%-1.25% per year of service is common in Private Sector DB Plans, a factor of 2.00%-2.75% (and even 3% for safety workers) is typical of Public Sector Plans. Hence the formula factor ALONE generally results in Public Sector pensions 2x-3x more generous than their Private Sector counterparts.
With respect to (b) …… Several TYPICAL “provisions” unique to Public Sector Plans make them far more generous, and hence far more costly than Private Sector DB Plans. They are:
(1) MUCH earlier Full retirement ages with unreduced pension payouts. While Private Sector Plans typically have age 65 (sometimes age 62 with service of 30+ years) as the full unreduced retirement age, the Public Sector pensions typically have age 55-60 (and even 50 for safety workers). Collecting your FULL pension at an earlier age means that it will be collected for a longer period of time, This single difference makes an otherwise identical Public Sector Plan about 25% more generous and hence more costly than an otherwise identical Private Sector Plan with the much higher full unreduced retirement age.
(2) Almost no Private Sector DB pensions include annual COLA increases, while virtually all Public Sector Plans do. Adding a 3% annual COLA increase to an otherwise identical Plan w/o the COLA provision increases the Plan’s value (i.e.,”generosity”) by just about 1/3,
(3) DB pensions are a function the workers final (or final 3 or 5 year average) “pensionable compensation”. In Private Sector pensions, “pensionable compensation” usually means BASE PAY and nothing more. In Public Sector pensions, IN ADDITION TO Base Pay, it often includes overtime, unused vacation payouts, unused sickness payouts vacation payouts,and sometimes the value of “allowances ” for uniforms, parking, cell phones, etc.
Including such item is nothing but a Taxpayer ripoff. Our elected officials (bought-off with Public Sector Union campaign contributions and election support) agree to such terms because they are not spending THEIR money on these pensions. They are spending the Taxpayers’ money. Private Sector employers would never be so foolish as to include such items as they are indeed spending the Company’s money and would never spend it so foolishly.
Even putting aside the incremental value of (3) above which can be quite substantial due to the incentive to load upon overtime (and unjustified end-of-career promotions) and hence “goose” one’s “pensionable compensation” and hence their pension, let’s just look at the incremental value other items I mentioned above:
Assume:
* Both Private & Public Sector workers retire with a final pay of $100,000
* Assume they both start at age 25 and work 30 years to age 55, and then retire.
* The formula factor (per year of service) is 1.25% for the Private Sector worker and 2.50% for the Public Sector worker.
Here is the $ annual pension comparison for the 2 workers:
Step 1:
Private = $100,000 x 30 x 0.0125 = $37,500
Public = $100,000 x 30 x 0.0250 = $75,000
Step 2 (adding in the incremental “value” of the ONLY the Public Sector worker’s pension being unreduced when collecting at the young age of 55 ):
Public = $75,000 (from Step 1) x 1.25 (from item (1) in the discussion above) = $93,750
Step 3 (adding in the value associated with ONLY the Public Sector workers’ pension being COLA adjusted):
Public $93,750 (from Step 2 …and YES, these adjustment are cumulative, not additive) x 1.33 (from item (2) in the discussion above) = $124,688
So where are we …….. On an APPLES-TO-APPLES basis for two comparably paid Public & Private Sector workers making the SAME pay, working the SAME number of years, and retiring at the SAME age, the TYPICAL Public Sector worker’s pension is ($124,688/$37,500 = ) 3.325 times greater than their Private Sector counterpart….. right in the middle of my above statement than the TYPICAL Public Sector pension (for a non-safety) workers is 2x-4x greater in value than their Private Sector counterparts.
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And for completeness, the accumulated value at retirement of all of the Public Sector worker’s contributions (including all of the investment earnings thereon) to their pension (when such contribution is in fact actually made by the employee and not picked up by the employer, meaning the Taxpayers) is rarely more than sufficient to buy more than 10-20% of the VERY generous pensions they have been promised. The Taxpayers’ contributions and the Investment earnings thereon (earnings that, in the absence of the need to fund these grossly excessive Public Sector pension promises, would have stayed in the pockets of the Taxpayers, perhaps to help fund their much smaller retirements) are responsible for the 80-90% balance.
While Private Sector Taxpayers generally do not contribute to Corporate-sponsored DB Plans, the accumulated value of the Public Sector workers’ own contributions is roughly equal to the incremental value to the Public Sector workers’ pension from item (3) in my above discussion but NOT reflected in the above calculation of the full “value”of their pensions. Hence (by canceling each other out), the 3.325 times greater Public sector pension is valid even AFTER factoring in the employees’;own contributions.
Conclusion…..It’s WAY past time for VERY MATERIAL pension reductions, not just for new Public Sector workers, but for the future service of all CURRENT workers.
The BEST way to do so is to freeze all current DB Plans and replace them (for future service) with a DC Plan with a modest Taxpayer (% of pay) “match” comparable to what Private Sector workers typically get from their employers. Why should Public Sector workers get ANY more let alone MUCH more.? Are they “special” and deserving of a better deal …. 80-90% paid-for on the Taxpayers’ dime?
November 26, 2013 at 1:46 am
Tough Love – I am fully aware of and agree with you on all or most points except I would add that many state and municipal workers also frequently have higher base pay for similar work and pay for certain jobs that are harder to compare seems grossly disconnected to the high side from supply and demand factors. This only makes lavish pensions even more outrageous.
I was only trying to highlight that even the city of Stockton wanted to cut pensions. It is simply grossly unfair to all other creditors to not make such a simple and obviously justified change as reducing the cola from 5 to 2 percent. Similar changes have been the key change in other states such as Colorado. Courts have ruled that Cola changes are allowable even outside bankruptcy. See: “Two Rulings Find Cuts in Public Pensions Permissible” at http://www.nytimes.com/2011/07/01/business/01pension.html?_r=0 . In my opinion, failure to change the cola to something reasonable in bankruptcy is sufficient reason by itself to not approve the bankruptcy plan. To not do so seems like an act of incompetence, a serious failure of the bankruptcy process. Something I would to trust that the judge does not want to be associated with.
November 28, 2013 at 5:31 pm
And now some facts:
Vallejo was built on one industry, the Federal contract to store old ships. That contract ended and all they had was an amusement park that brought in 5 times the visitors the new Sacramento Arena will bring in. Whoa wait, the taxes and parking revenues won’t support a little town like Vallejo? As it turns out, an amusement park, a Target and a Starbucks can’t sustain a little town like Vallejo (yes they have more than that but you have to go into the neighborhoods). Don’t blink when you drive by.
Stockton is a bedroom community of the bay area. They over built during the housing boom creating a Potemkin Village just as Texas did during the late 1980’s with the SL’s. Turns out, the real estate agents were buying the homes and holding them and as values increased they used the equity to buy more. House of Cards anyone? People who lived there because the bay area was too expensive got NINJA loans and moved closer to their jobs. Read any of the thousands of stories on Stockton and the housing bust. The fact all of that collapsed and the cost of operating the city went up as they built arenas and river walks for people who didn’t actually live there to use, is independent of pension cost.
There is no causal relationship between the bankruptcy and pension or other benefit cost. It is simply an issue of nobody living in the homes they expected to collect tax revenues on. No people = no businesses = less taxes. Don’t forget the city was sued after the they took $10.9 million from municipalities to help finance the arena complex, the waterfront river walk, new city hall building, a new parking garage and lots of shiny new parks and public art. After being sued for illegally taking the money, the city is paying back $1 million a year on the judgment for the next 30 years.
Yes, if you spend money or steal money based on income you won’t have 1,2,5, 10 years later, you will come up short when it goes away or you have to pay it back. Now they have some tough choices. Keep the benefits for city workers in fire and safety positions to compete with other cities or go without fire and safety and numerous other services. The people who live there and moved there, expected those things. They are making payments on bonds for services, lawsuits, and repossessed buildings, garages, and parks, the problem is you can see empty home after empty home lining the streets and that is the problem, “Stockton City Council adopted an urgency ordinance aimed at protecting neighborhoods from becoming blighted due to a lack of adequate maintenance or security of vacant buildings and properties”.
I am not sure any of you live in California let alone Northern California but to say that pension cost are the problem is like blaming todays weather on a bird flapping its wings in Africa last week. Looks like rain is on the way. Time go bird hunting for some of you.
November 28, 2013 at 9:06 pm
@Bille well said.
November 29, 2013 at 4:44 am
Billie, The “cost” of a pension is a function of it’s “richness”, which is itself a function of the pension “formula” and the pension “provisions”.
Taken together, the extremely rich “formulas” and very liberal “provisions” in Stockton pensions resulted in the Taxpayer-funded share of their Public Sector workers’ pensions having a value at retirement 3-4 times (4-6 times for safety workers) greater than that of comparable Private Sector workers retiring at the SAME age, with the SAME pay, and the SAME years of service.
And while the housing bubble did indeed cause a huge drop in revenue, no matter how high the revenue stream might have become, there was NEVER any justification for these absurdly generous and hence extremely costly pensions & benefits.
Bottom line…..without a mechanism to reduce those pension & benefit promises (by 50-75+%) to a level MUCH closer to that promised Private Sector workers, they are indeed the ROOT CAUSE of the continuing financial mess in Stockton.
Stockton will NEVER get out from under their financial problems without very material reductions to the pensions & benefits of their CURRENT workers.
November 29, 2013 at 5:37 am
I can’t speak for all ‘private sector employers’ but I worked for the City of Vallejo (non public safety) and my retirement formula was the same as my son’s who worked for a bay area oil refinery. If you are talking about Public Safety then I would have to agree, their retirement formula is absurd. But Cities like Vallejo and Stockton were not forced to give 3% @50 not all agencies were so generous. Bottom line is, at least in Vallejo part of the reason Public Safety got amazing benefits is because managers, both exempt and those belonging to the CAMP bargaining unit piggy backed off of everything that public safety got. When you have department heads selling something to a very naive City Council that they will benefit from and apparently NO one in the Finance Department able to run the numbers on the costs going forward you are going to be facing an impending disaster. So far the only ones who took a bath in this fiasco are IBEW members, both current and retired.
November 29, 2013 at 6:30 am
Dear retired_IBEW, Even IF your son’s pension had the same formula (factor per year of service)….which would be very unusual), I very much doubt that the full retirement age in your son’s Plan is as young as young as yours. Assuming yours is just 5 years younger than his that makes YOUR plan worth about 33% more.
I also doubt that your son’s Plan includes Post-retirement COLA increases, and a 3% annual COLA increase provision in your Plan (but not his) again makes YOUR plans 33% more valuable.
And with BOTH of these 2 differences (BOTH of which are common differences in almost all Public vs Private Sector Plans), YOUR Plan is 1.33 x 1.33= 1.77 or 77% MORE valuable.
Add in the fact that in many Public Sector Plans the “formula factor” is double+ that of the comparable Private Sector worker’s Plan, and it is easy to see how the Public Sector worker’s Pension is often 3-4 times more valuable.
November 29, 2013 at 3:30 pm
@Tough Love- My plan was 2 % @ 60, his minimum retirement age was 50 and pension was calculated by combination of age + length of service, if I remember correctly the max pension was reached at 59 1/2 with his employer. By the way, I don’t have a 3% COLA
November 29, 2013 at 6:36 pm
If you can, pass along the specifics of your son’s Plan.
A traditional PRIVATE Sector Defined Benefit Plan with the payout based on final;average pay, years of service and a factor per year of service with an UNREDUCED payout starting at age 50 is so unusual that I’m comfortable saying the odds of what you are saying being an accurate representation of Plan provisions is just about ZERO.
November 29, 2013 at 9:06 pm
@Tough Love I expected a response like that from you. It appears that your sole purpose in posting here is to spread the word on how horrible ALL public employees are and if anything gets in the way of that idea you shoot the messenger. The information I gave you was valid when my son was hired, and it’s still in effect for employees working under that plan. It probably has changed since then because how else could Exxon and Shell have earned a profit of 54 billion in 2012 and continued to offer workers such an awesome pension?
November 30, 2013 at 12:03 am
Retired_IBEW, I responded as such because I an VERY familiar with private and public sector pension Plan funding and design.
While it is very common for towns, cities and state’s elected officials
to give their workers pensions far in excess of what is reasonable or necessary to attract and retain a qualified workforce (usually in exchange for Public Sector campaign contributions and election support) it is unheard of in the private sector because companies refuse to spend THEIR OWN money (not Taxpayers’ money) so foolishly.
I am all but certain the Plan you described for your son’s Private Sector is a figment of your Public Sector Union entitlement mentality …. or perhaps just an outright lie to make the uninformed reader think that perhaps Public Sector Plans might not be so extreme.
Oh,and if EXXON (as well as every other PRIVATE Sector company) can prospectively reduce the pension rate
accruals for FUTURE service, why should Taxpayers not be able to do so for Public Sector pensions?
Are you “special” and deserving of a better deal on the Taxpayers’ dime?
November 30, 2013 at 1:21 am
I really don’t like being called a liar. Here’s an article that discusses the structure of the Shell Oil defined benefit plan http://www.plansponsor.com/MagazineArticle.aspx?id=6442461773&magazine=6442461526 I don’t think it directly answers your question but it does give you some background into how the plans are structured. As far as prospective changes in pensions, it’s done all the time for new employees, look at Contra Costa County and the changes they have made in the past few years.
My personal feeling is that no one in public or private sector should receive a pension in excess of 50% to 60% of their final salary. If achieving that means future benefit cuts for current employees, then so be it; but that should also apply to public agency department heads, City Managers, and public elected officials. It gets complicated in situations where Cities squandered money like drunks in a pool hall (i.e. Vallejo) and then when they are broke start crying about pensions, there should be some penalty to those cities so that the public will think twice about re-electing the same mayor and council who largely caused the mess.
November 30, 2013 at 2:55 am
Retired_IBEW Says, While that article encompasses a lot of issues, the answer IS in this paragraph..
“In fact, the 50-year-old worker who takes early retirement after reaching the cliff can begin to collect 50% of her full pension benefit immediately, even though actuarially she has only earned 21% of the full defined benefit.”
At age 50,(and after meeting the”cliff”), the worker can get, not just the the actuarial value of the pension accrued for past service which is only 21% of it (due to electing to COLLECT IT at the age 50, likely 15 years before the Plan’s Normal Retirement Age), but an enhanced pension of 50%….meaning that the accrued pension for past service is STILL reduced by 50% from what it would be if the Plan’s UNREDUCED “Normal Retirement Age” were reached.
For comparison with that Private Sector Plan, a California Police officer can retire AND BEGIN TO COLLECT that pension getting 100% of their accrued pension at age 50……..and being UNREDUCED at age 50. an enormously generous and enormously costly (to Taxpayers) pension.
It sounds like yours is collectable WITHOUT reduction at age 60,,,,still 5 years earlier than almost all Private Sector Plans. Social Security reduces the payout by 6% PER YEAR OF AGE for EACH age before your normal retirement age that you begin to collect your pension. THAT’s the correct actuarial reduction.
By collecting at age 60 vs 65 for the typical Private Sector pension YOUR pension should have been reduced by 5x 6% = 30%…but apparently isn’t. Taxpayers pay for that…unfairly!
Actually your suggestion …”My personal feeling is that no one in public or private sector should receive a pension in excess of 50% to 60% of their final salary.” is a pretty good one…..as long as it applies uniformly to BOTH Public and Private Sector workers and BOTH sets of workers get the SAME formula and the SAME provisions……because with “cash pay”:in the 2 Sectors being near equal (incomparable jobs), there is zero justification for Taxpayers to contribute MORE to the pensions of Public Sector workers than what they get from their own employers.
And you hit the nail on the head. Future service pension accrual for CURRENT workers MUST be materially reduced to avoid a tsunami of pension-driven bankruptcies throughout the country
November 30, 2013 at 4:30 am
My plan was 2% @ 60, I would have gladly worked to 65 but I was involuntarily retired on a work related disability before I reached retirement age. My pension after 20 + years of employment was 33% fully taxable. I see absolutely NO logic in extrapolating the reduction in early SS retirement to an equivalent reduction in a defined benefit plan.
Perhaps you are just grasping at straws to support 30% pensions? Why not just say what you really think- that the only ‘pension’ that anyone should have is a sucky 401k so that the fund managers are the only ones who ultimately benefit while the rest of us compete for jobs at Walmart when we are 70?
I already stated that 70-90% pension formulas are not something I agree with, however I don’t think that there should be a ‘race to the bottom’ either. When I was a kid my dad was a factory worker and had a defined benefit plan, so did the cop across street from us and the man next door who worked the counter in an auto parts store. They all retired comfortably. No companies or public agencies were going broke because of pensions then, and I really think it’s a big lie that they can’t be afforded now. There are some who think the answer is to eliminate the public sector & privatize everything, and pay zero benefits and no pensions to both public and private employees. I hate to think what will happen to the middle class if that ‘dream’ is ever fully realized.
November 30, 2013 at 6:23 am
Retired_IBEW Says ,….” I see absolutely NO logic in extrapolating the reduction in early SS retirement to an equivalent reduction in a defined benefit plan. ”
While there might be a small variation in the reduction percentage depending on the expected mortality of the particular group …likely less than 1% of,the 6% reduction (per year of age) it’s simply actuarial mathematics and is applicable to make an apples-to-apples comparison between Plans in all such situations.
Actually the BEST reason to dump all Public Sector DB Plans and move to DC Plans is to end the collusion between the Public Sector Unions and our self-interested, vote-selling, contribution-soliciting, Taxpayer-betraying elected representatives.
It’s not a race-to-the-bottom. Global competition has forced major change in the “ABILITY”:of employers of productive enterprises to compensate their workers …. and they have just about all come to the conclusion that the traditional-style (final average salary) pension plans are unaffordable and way too risky to their survival.
And, the 85% of all worker who work in the Private Sector set the standard for what is “market compensation”,not the 15 % that work in the Public Sector.
As I said earlier,with “cash pay” in the 2 sectors being near equal in the vast majority of occupations, there is zero justification for ANY greater Public Sector pensions or better benefits…..let alone the current structure of Public Sector pensions routinely MULTIPLES greater in value and benefits FAR greater than those granted Private Sector workers.
December 3, 2013 at 4:59 am
TL,
while I like Retired_IBEW he did fail to mention a few things. I’m not sure when he/she retired but the current pension formula for Vallejo IBEW is 2.7@55, final highest 12 months salary, and a few other perks including, but not limited to, an additional 5 years of paid healthcare as a function of lowering the retirement age from 60 to 55, which also increases the pension costs. I think Vallejo’s IBEW bargaining unit may have also received retroactive pension benefits (hopefully R_IBEW can confirm or deny that claim).
What Retired_ IBEW didn’t mention is that Vallejo is a minority city in that they are one of very few that pays both pension benefit contributions as well as Social Security contributions. Currently, I believe there are less than 10 percent of all CalPERS agencies that pay both the 2.7@55 pension benefit and also pay for Social Security benefits on top of that. That’s a pretty sweet deal for the employees and a lousy deal for the taxpayers.
CalPERS actuarial report lists this bargaining unit as the “Miscellaneous Plan of the CITY OF VALLEJO”. The current 2013/14 city/taxpayer pension contribution is, according to CalPERS:
28.144 PERCENT OF PAYROLL
That is a very large number for a non-safety plan. But, on top of that, Vallejo also pays 6.2% of payroll toward Social Security benefits for the very same employees that receive a 2.7@55 pension formula.
So, the FY 2013/14 contributions toward retirement benefits ARE: 34.344 percent of payroll.
And that doesn’t include retiree healthcare benefits. Just one of many reasons why Vallejo is a long way from being stable, to put it mildly.
December 3, 2013 at 7:07 am
As far as I know IBEW never received retroactive benefits- I know for a fact I never got any, I thought that was only public safety. I always paid my own social security when I worked for Vallejo, but I have no information if that changed. I will try to find the latest IBEW contract online tomorrow to get more information on those issues. I have no idea why the City gave IBEW 2.7@55, it’s stupid. I thought 2% @ 60 was very fair. Maybe they did that for the same reason that they did everything else, pressure from CAMP and exempt department heads who also benefited from benefit increases.
December 3, 2013 at 7:23 am
Captain, Since Valllejo IBEW gets SS as do Private Sector workers, and since I doubt the IBEW workers are making less in cash pay than they would in the Private Sector, the average taxpayer-paid contribution toward their pensions of 28.144% of pay seems directly comparable to the 3-5% of pay Private Sector workers typically get as employer contributions into their 401K Plans.
Heck, why should Taxpayers be pissed-off? After all these IBEW workers only SEVEN TIMES greater than what THEY typically get.
December 3, 2013 at 4:55 pm
Here’s the most recent IBEW MOU, there is nothing in it that indicates 2.7%@55 was retroactive and the formula for new hires is now 2%@60
Click to access IEDA215_9902_IBEW%20MOU%20JULY%201%20%202010%20THRU%20DECEMBER%2031%20%202012.pdf
If you want to see a sweet contract check out CAMP’s. The revised formula for their new hires is 2.5%@55 not 2%@60 and there is no cut in retiree health care for employees hired before 2009 and those hired after that date will need 10 years of service in order to qualify for fully paid health insurance.
Click to access IEDA215__CAMP%20SUPPLIMENTAL%20AGREEMENT%20EFFEC.%202-11-09%20THRU%206-.pdf
CAMP and exempt Department Heads have the ear of the City Manager and Council and consequently they direct the course of contract negotiations and big surprise, they ALWAYS come out with 100% of what they want because they make sure they give minions benefits that they can piggyback off of and then add a few more goodies unique to themselves.
I remember when IBEW gave up a pay raise to get a very limited city contribution toward retiree healthcare – at the time it was $75 a month for the retiree only, not family members. A month later CAMP signed their contract with a vastly better retiree health insurance benefit AND a pay raise That crap has been going on for decades and would not be nearly so annoying except for the fact that these ‘manager and administrators’ are almost all extraordinarily lazy and incompetent.
December 3, 2013 at 6:41 pm
Most private sector employees could have applied for a public sector job and chose not to, so maybe they don’t agree with you about pay being the same in private and public sector jobs? My youngest son is an accountant with a Northern California public agency, his pay is 52k a year and that is after 3 years with that employer, he also makes a substantial contribution to his retirement which is not part of Calpers. From BLS, the average pay (2011) for a private sector accountant is $71.041, average local government $60,600.
December 3, 2013 at 10:35 pm
Dear “Retired_IBEW Says: “…….
So are you trying to “justify” YOUR grossly excessive pensions by referring too other Public Sector worker pensions that are even more egregious?
Oh yeah ,……. that will make it all ok.
December 3, 2013 at 11:07 pm
@Tough Love- my pension is grossly excessive? yeah, sure whatever you say boss
December 4, 2013 at 12:22 am
Hi Retired_IBEW
A couple of comments regarding several of your posts. I never meant to imply that you didn’t contribute toward Social Security. Both you and the City of Vallejo each contribute 6.2% (6.2% toward SSI and 1.45% toward Medicare) for a total contribution of 7.65% each, or 15.3% in total. Because the 6.2% social security contribution paid by the city/taxpayers is a retirement benefit, I added it to the 28.144% that the city currently pays to CalPERS, which brings the total current city/taxpayer cost of retirement benefits to 34.344% of payroll. That is a big number. Current employees also contribute 8% of payroll toward their pension, and also 6.2% toward their social security benefits.
The new 2@60 formula for new hires is only a step in the right direction. Because Vallejo is one of only about 10-15% of all cities that pay both social security and pensions the formula for pensions should be less, IMO. The current employee retirement benefits for both CAMP & IBEW are both ridiculous and costly. The net result, assuming you need 60-70 percent of your working income during retirement to maintain your standard of living during retirement, is an enrichment of public employee standards during retirement at great expense to taxpayers.
I completely agree with you regarding the CAMP contract and the incompetence of some of their members. The safety contracts are excessive and well beyond Vallejo’s ability pay. None of that means IBEW isn’t overcompensated also. IMO, they are mainly based on the excessive retirement benefits. The good news is that the new City Manager appears to be very good.
Vallejo has a lot of work to do. While they’ve been paying some of the richest employee contracts in the state their service level has deteriorated rapidly, and the condition of their roads is THE worst in the bay area. The 5 million dollar deficit they’re facing doesn’t begin to tell the full story: The pension deficit is about 250 million, according to a recent city report they would need to spend one billion on roads to bring them to standard, the unions appear to have control of the city council, and the school district is a complete mess. And about 15% of the entire budget consists of funding through a temporary sales tax hike.
Vallejo is still in a very precarious position.
December 4, 2013 at 2:28 am
Tough Love Says: “Captain, Since Valllejo IBEW gets SS as do Private Sector workers, and since I doubt the IBEW workers are making less in cash pay than they would in the Private Sector, the average taxpayer-paid contribution toward their pensions of 28.144% of pay seems directly comparable to the 3-5% of pay Private Sector workers typically get as employer contributions into their 401K Plans.
Heck, why should Taxpayers be pissed-off? After all these IBEW workers only SEVEN TIMES greater than what THEY typically get.”
I agree with you completely.
December 4, 2013 at 3:43 am
Hi Captain- I’m not following you, are you saying that most miscellaneous municipal employees are not in Social Security, or that they do not receive a PERS pension? I have many friends who either currently work, or are retired from California public agencies and they all pay their portion of SS, and are eligible for, or receiving a PERS retirement.
I looked on the Calpers website and public agency payment for miscellaneous payment for 2012-2013 is 25.762%. According to the latest IBEW contract, members pay 10% of that, so unless my math is wrong the City is paying 15.762 + 6.2 = 21.962%. If you assume that all employers would pay the 6.2% SS, then that leaves around 16% to be reckoned with. My guess is that with a number of agencies dropping back from 2.7%@55 and 2.5%@55 to a more reasonable 2%@60 that contribution rate should drop within a few years.
December 4, 2013 at 5:29 am
Retired_IBEW
I apologize for the confusion. I’m saying that most miscellaneous employees do NOT receive social security retirement benefits. Vallejo IBEW conducted/commissioned a salary survey of 20 cities. Of those 20 cities only three paid BOTH pension & social security benefits, and one of three was Vallejo. Most cities left social security when they had the option to opt out (in the eighties I believe) in favor of enhanced pension benefits. A few cities, like Vallejo, have provided both. For current workers it means less take home pay during working years but much more during retirement.
Regarding your following statement, “I looked on the Calpers website and public agency payment for miscellaneous payment for 2012-2013 is 25.762%.”
I know it can be confusing but the current fiscal year is FY 2013-14 (July 1, 2013 to June 30, 2014). The current CalPERS required payment IS, and this is just the city portion, 28.144 percent of payroll. If you look at the CalPERS actuarial report the 28.144 percent is clearly under the heading: “Employer Contribution Rate.” and that number will soon increase dramatically. If you recall, CM Keen said the cost for employee pensions will increase by 22-45 percent depending on the bargaining unit, according to the COV projections.
R_IBEW, employees pay 8% toward their pension and that is separate from the 28.144 percent I’ve listed above. They also pay 1 percent toward the employer cost for a total of 9 percent (not sure where you get 10% from – and employees also contribute 6.2% toward social security). So, you can deduct that 1 percent from the 28.144 percent the city pays making the net city pension contribution 27.144 percent of payroll. Then you can add the 6.2 percent city/taxpayer social security contribution, which most cities – and city employees don’t pay, and the city contribution for retirement benefits (SS & Pensions) is 33.344 percent of payroll.
I hope I explained my position in a way that makes sense. If not let me know and I’ll try to do better next time. And, like always, it’s quite possible I’ve made an error.
December 4, 2013 at 5:56 am
Retired IBEW
For the sake of clarity, CalPERS lists the employer/employee pension contribution as follows:
Employer: 28.144 percent of payroll
Employee: 8.00 percent of payroll
Total contributionemployer/employee contribution: 36.144 percent of payroll.
You can subtract the 1% employer pick-up from the employee side which increases the employee contribution to 9%, and reduces the employer contribution to 27.144 percent. Then you can add in social security for both. You can NOT deduct the employee contribution from the employer contribution.
December 4, 2013 at 6:28 am
Ok, thanks
December 4, 2013 at 3:58 pm
Captain, I am not trying to argue, I’m just trying to make sense of what I am reading here. Can you explain why the total cost of a miscellaneous pension is 36% for Vallejo, but for the City of Belevedere it is dramatically less:
“For FY 13/14 the percentage of salary to be paid by the City and by employees for pension coverage is as follows: Miscellaneous (non-safety) employees: City 10.81% Employee 7% Safety employees: City 19.9% Employee 9% ”
That is from page 2 of this: http://www.cityofbelvedere.org/DocumentCenter/View/1760
December 4, 2013 at 5:59 pm
Dear Retired_IBEW Says:
So maybe the Taxpayers are contributing to YOUR pension only 6 (not 7) times as much as THEY get in retirement contributions from their employers……. and you object to my calling that grossly excessive ?
Whether it is “Grossly Excessive” isn’t determined by how much YOU feel that you need to meet your own retirement expenses. It is properly determined by how what YOU get compared to what EVERYONE gets in retirement benefits…. and with 80%-85% of all workers working in the Private Sector, THAT GROUP (not Public Sector workers) really determines “market compensation”.
December 4, 2013 at 7:02 pm
Tough Love- Walmart is the largest private employer in the US, should they set wage and benefits for everyone? (no need to answer that)
December 5, 2013 at 2:46 am
Retired_IBEW
Feel free to argue away. To your question, “Can you explain why the total cost of a miscellaneous pension is 36% for Vallejo, but for the City of Belvedere it is dramatically less”. I’ll give it a shot but that is a question best answered by an actuary, city manager, or the city finance director. If you really want to know what’s going on in the Vallejo pension plans maybe the best source of information is John Bartel. He is both an actuary and CalPERS pension expert that has been making the rounds in dozens of California cities. Not sure what he charges to present at a city council meeting but I’ve seen him and he’s very good – just the facts! You should encourage Vallejo to hire him. You can also Google him and find some of his presentations on youtube. It’s a great way to learn.
First, Vallejo has a more expensive plan (2.7@55) than Belvedere (2@55) for the miscellaneous employee group. According to CalPERS, the normal cost for Vallejo’s plan is 10.22 percent of payroll for the city, and 8% for the employee. Belvedere’s “normal cost” is 8.1 percent of payroll for the city, and 7 Percent for the employee. If we just focus on the “normal” city cost the difference is 2.1 percent of payroll. We have a long way to go to reach parity.
Next, the CalPERS actuarial reports for the current year (FY 2013-14) list Vallejo’s/taxpayers cost at 27.144 percent of payroll (28.144 minus the 1 percent employees pay), and Belvederes/taxpayer cost at 15.61 percent of payroll. You mentioned that Belvedere’s current city/taxpayer cost is 10.81 percent of payroll, and it is (but it isn‘t yet reflected in the CalPERS actuarial report). The reason for that is Belvedere elected to use cash reserves to pay down a portion of their unfunded pension liability. They decided cash reserves, which were earning about 1 percent, would be better spent paying down that debt because CalPERS charges a 7.5% interest rate on the unfunded liability (saving themselves hundreds of thousands over the next ten years). This reduced reserves below their benchmark and, as a result, they are considering new tax measures to increase revenue. For the sake of this discussion I suggest we use the 15.61 percent number for Belvedere (apples to apples).
So far 2.1 percent of the difference (between 27.144 and 15.61 percent of payroll is 11.5 percent) can be attributed to Vallejo having a more expensive plan with better benefits. But why does Vallejo still pay 9.4 percent more as a percentage of payroll (11.5 – 2.1 = 9.4 percent).
I’m out of time for now – you should watch the youtube Video of John Bartel. He’s very good and very informative. I’ll try to finish soon. Was that helpful?
December 5, 2013 at 3:11 am
Re: “Retired_IBEW Can you explain why the total cost of a miscellaneous pension is 36% for Vallejo, but for the City of Belevedere it is dramatically less:”
There are many possible factors, but a key factor may be that Belvedere’s plan has a higher funded ratio, 76.7% for Belvedere, versus 65.7% for Vallejo. Employer payments to CalPERS are a combination of normal and unfunded pay-down amounts. These stats come from CalPERS actuarial reports for the different plans.
Other potential reasons why the funded ratios are different include: 1) different city histories, older cities tend to have more legacy pension costs including that an a older city may have relatively larger number of older employees, and 2) cities may voluntarily pay down unfunded amounts to avoid accruing an interest penalty on the unfunded balance. Rich communities may just send extra money, others may issue pension obligation bonds.
December 5, 2013 at 3:54 am
Retired_IBEW Says:
I will answer it…………
No, of course not, but as much as Walmart is stingy, Public Sector Union/workers are insatiably greedy.
December 5, 2013 at 4:30 am
ok, thanks that sure is a large difference, isn’t it? I don’t have contact with anyone in Vallejo anymore. I tried to talk to some of the City Council members about some of the Cities endemic problems (of which there are many) when the talk about Bankruptcy first started, and they just didn’t want to hear it.
I cringed when public safety got 3%@50 and knew when miscellaneous and CAMP got 2.7%@55 I knew that would end up being an unmitigated disaster even in a normal economy. I can just about guarantee you that CAMP was instrumental in pushing for the 2.7@55 that’s just how they roll, they use their influence to get a benefit for another bargaining unit, then they piggyback off of it. If you look at the latest Camp contract, their new hires aren’t going to get the new formula IBEW is getting (2%@60) but instead they are going to get 2.5%@55. And from what I’ve been reading VPOA retirees won’t get a haircut on their health insurance, the only ones who will be affected “might” be new hires. Oh, and even more interesting- there are two CAMP documents on the Vallejo website, the “summary of benefits” infers that new CAMP hires CalPERS formula will be 2%@62, but the actual MOU states 2.5%@55. (just an oversight I’m sure =/ )
But it goes beyond pensions and unless Vallejo starts taking their fiduciary responsibility seriously they will probably be the first US City to declare bankruptcy twice. For instance, they have no real procedure for procurement of large purchases, a department head can go to the Council and simply claim that a large expenditure has to be ‘sole sourced’ and the Council doesn’t bat an eyelash and no one from questions it. Unless they got one recently, they do not have a purchasing department and have never standardized RFQ’s and RFP’s, it’s absurd.-that alone has to cost them millions over time. It might have changed since I retired, but the way that department spending worked when I was there was that you spent every single penny of your budget- you just bought crap you didn’t need to make the money go away because if you had money left over your next years budget would be cut. Brilliant,huh?
Public Safety department heads have had carte blanche whenever they get a hair up their A$$ to spend money; a mounted patrol staffed by cops who already had horses and ended up getting special duty pay and money to take care of their pets. An extraordinarily expensive program run by UC Davis for Officer Fitness (the same cops who were fat when the program started were still fat years later) I could go on and on, but I don’t want to bore you and all of this has put me in an awful mood, I try not to think too much about it.
December 5, 2013 at 6:37 am
Captain,
Quoting… “According to CalPERS, the normal cost for Vallejo’s plan is 10.22 percent of payroll for the city, and 8% for the employee. Belvedere’s “normal cost” is 8.1 percent of payroll for the city, and 7 Percent for the employee.”
The above %s from your earlier comment shows CalPERS true colors ……meaning the great lengths to which it goes to understates the true cost of such generous pension promises.
The true cost of the described pensions…..meaning the level annual % of pay necessary to fully fund the promised pensions over the working careers of Plan participants, using assumption that the US Gov’t REQUIRES Private Sector Plan Sponsors to use in the valuation of their Plans, would be at least TRIPLE the CalPERS percentages.
December 8, 2013 at 9:36 pm
Althink81
“For example, Stockton now offers a 5% annual adjustment for pensions. ”
I haven’t checked yet, but I believe that is a 5% MAXIMUM adjustment.
Typical state miscellaneous retirees have a 2% maximum COLA, and for the past few years have received less than that. The COLA is CPI increase OR 2%, whichever is lower.
I suspect it is the same with Stockton’s 5%.
December 8, 2013 at 9:51 pm
Tough Love
“Heck, why should Taxpayers be pissed-off? After all these IBEW workers only SEVEN TIMES greater than what THEY typically get.
Just keep rantin’, you’ve already lost ALL credibility.
December 9, 2013 at 12:22 am
S Moderation Douglas Says:
Ranting?
Tell it to Judge Rhodes!
December 9, 2013 at 12:36 am
Ten Private Sector Pensions, which does not include their annual compensation and bonuses. If private industry can afford this for their CEOs, and bonuses on down the line for thousands of employees, I think we can afford a thousands of people getting $2,600 a month on average. Do the math and see what this amounts to per month for just one person.
Company CEO pension value:
1. Walmart $113,157,559
2. McKesson $115,822,288
3. GE $53,184,790
4. AT&T $42,744,354
5. Phillip Morris $60,450,060
6. Pfizer $34,541,840
7. ExxonMobil $68,072,125
8. Bank of America $7,698,032
9. Google $9,105,779
10. Oracle $14,866,191
http://www.cnbc.com
Just for example: Goldman Sachs paid an average of nearly $400,000 in per employee bonus. And they have Defined Benefit Retirement plan. JP Morgan only gave $216,000 bonuses per employee on average. Wow, how can JP retain the best and brightest with such low bonuses?
http://www.wsj.com
Merry Christmas Toughlove! I am asking Santa send you a tiny violin. It I worked at Goldman Sachs or Jp Morgan it would be a Stradivarius and I would purchase instead of asking Santa.
December 9, 2013 at 2:04 am
Billie Says:
Irrelevant and you know it………
The comparison with Public Sector worker cash pay, pensions, and benefits is MIDDLE CLASS Private Sector workers, not super CEOs.
And with “cash pay” in these 2 groups near equal (in comparable occupations), there is ZERO justification for the absurdly generous (and hence VERY VERY costly) pensions and benefits granted virtually ALL Public Sector workers … and 80-90% paid-for on the Taxpayers dime !
Your NOT “special” …and Judge Rhodes has just laid the foundation for proving it …. by deciding that REDUCING these ridiculous promises is both a legal and proper option.
December 9, 2013 at 3:51 am
Judge Rhodes didn’t claim that government workers were making SEVEN TIMES what taxpayers make. Even The Heritage Foundation says that California government workers make LESS in cash pay than comparable private workers.
Even Heritage won’t claim SEVEN TIMES. They say government total compensation may be “as much as” 30% higher, and half of that comes from alleged “job security”.
Yes, “ranting”.
December 9, 2013 at 5:51 am
Responding to … S Moderation Douglas Says: ..
Do you think changing what I said to something else makes you look good? No. It makes you look like a DOPE.
HERE is exactly where the 7 times came from (the ratio of 28.144%/4%)…… pasted below and quoting from my above comment time stamped December 3,2013 at 7:23 AM:
————————————————————————
Captain, Since Vallejo IBEW gets SS as do Private Sector workers, and since I doubt the IBEW workers are making less in cash pay than they would in the Private Sector, the average taxpayer-paid contribution toward their pensions of 28.144% of pay seems directly comparable to the 3-5% of pay Private Sector workers typically get as employer contributions into their 401K Plans.
Heck, why should Taxpayers be pissed-off? After all these IBEW workers only SEVEN TIMES greater than what THEY typically get.
December 9, 2013 at 11:59 am
Rant
You are emphasizing ONE aspect of total compensation.
In total compensation, public sector workers are roughly equal to private sector counterparts.
As a rule, lower paid public workers total compensation is somewhat higher than similar private sector, and higher paid positions in the public sector make LESS than private sector.
You’re still beating a dead horse.