The annual cost of state worker pensions would increase to $6 billion in July in a recommendation from CalPERS actuaries, up $521 million from the current fiscal year and double the amount paid a decade ago.
School districts would pay $2 billion next year for the pensions of non-teaching employees, up $342 million from the current fiscal year and also double the amount paid a decade ago.
California Public Employees Retirement System rates, already at an all-time high, will continue to climb for at least another half dozen years as the last of four rate increses enacted since 2012 are phased in.
The nation’s largest public pension system is in a bind.
As rates go up, the investment earnings expected to pay nearly two-thirds of future pension costs are expected to go down. In February, CalPERS lowered its long-term annual earnings forecast from 7.5 to 7 percent.
The CalPERS investment fund was valued at $315.5 billion Monday. But like many pension systems, CalPERS has not recovered from huge investment losses during the financial crisis, when its fund plunged from $260 billion in 2007 to $160 billion in March 2009.
State worker pension funds had an average of 65 percent of the projected funds needed to pay future pensions last June, according to the new actuarial valuation expected to be approved by the CalPERS board next week.
The California Highway Patrol was the most troubled of the six state worker funds in the report, only 58.5 percent funded. Experts have told CalPERS that falling below 50 percent makes recovery very difficult, if not impractical.
A generous “3 at 50” pension formula negotiated by the Highway Patrol union and approved in landmark CalPERS-sponsored legislation, SB 400 in 1999, provides 3 percent of final pay for each year served at age 50, capped at 90 percent of pay.
The “3 at 50” formula was widely adopted by local police and firefighters. Critics say the high cost of pensions for crucial safety workers, who are a large part of local government budgets, is one of the reasons retirement costs are crowding out funding for basic services.
In 2007 the rate paid by the state for Highway Patrol pensions was 32.2 percent of pay. The Highway Patrol rate recommended for the new fiscal year beginning in July is 54.1 percent of pay. By 2023 the Highway Patrol rate is projected to be 69 percent of pay.
The miscellaneous rate for most state workers in 2007 was 16.6 percent of pay. The recommended miscellaneous rate for next fiscal year is 28.4 percent of pay, projected to increase to 38.4 percent of pay in 2023.
Highway Patrol members contribute 11.5 percent of pay to their pensions and do not receive Social Security. Miscellaneous members, who do receive Social Security in addition to their pensions, contribute 6 to 11 percent of pay, many of them at 8 percent.
A cost-cutting pension reform requires state workers hired after Jan. 1, 2013, to work two years longer to receive the same pension benefit as previously hired workers. Due to their union clout or other factors, state workers are exempt from a reform cost-sharing requirement.
The reform requires new hires in CSU, the California State Teachers Retirement System, 21 independent county systems, and CalPERS school plans to pay half the “normal” cost of their pensions, excluding the now large debt or “unfunded liability” from previous years.
As new hires fill positions, the reform is expected to curb growing pension costs, but significant results are likely years away (see Los Angeles Times/CalMatters analysis). Meanwhile, CalPERS state rates will continue to climb.
In 2007 the state paid CalPERS $2.7 billion, less than half the $6 billion recommended for the new fiscal year. School districts and other education employers paid CalPERS $920 million in 2007, less than half the $2 billion recommended for the new year.
Retirement costs in Gov. Brown’s proposed state budget
School districts pay a higher rate for non-teaching employees in CalPERS than for teachers in CalSTRS. And unlike teachers, non-teaching school employees receive Social Security in addition to their pensions.
The CalPERS rate recommended for non-teaching school employees next fiscal year is 15.5 percent of pay. Last week the CalSTRS board approved a rate of 14.4 percent of pay for teachers in the new fiscal year.
Under a funding plan enacted by legislation three years ago, the CalSTRS rate for teachers will reach 19.1 percent of pay in 2020. The CalPERS non-teaching rate is projected to be 23.8 percent of pay in 2020 and 27.3 percent in 2023.
The pension rate hikes will take a big bite out of school district budgets. In 2013 the combined rate was 19.65 percent of pay (CalPERS 11.4, CalSTRS 8.25). In 2020 the combined rate is expected to be 42.9 percent of pay.
Teachers pay more toward their pensions than non-teaching school employees. Teachers hired before the reform contribute 10.25 percent of their pay to CalSTRS. Non-teaching school employees hired before the reform contribute 7 percent to CalPERS.
The CalPERS rate for new non-teaching school employees hired after the 2013 reform is recommended to increase to 6.5 percent of pay in the new fiscal year, up from 6 percent. The CalSTRS rate for new teachers, 9.2 percent of pay, is not expected to increase until 2018.
CalPERS rate increases began in 2012 when the earnings forecast used to discount future pension costs was dropped from 7.75 percent to 7.5 percent. An actuarial method that no longer annually refinances debt was adopted in 2013.
A rate increase for a longer retiree life expectancy adopted in 2014 is still being phased in. One of the reasons listed for the CalPERS school rate increase next fiscal year is “the second year of a 5-year phase in of 2014 change in assumptions.”
And one of the reasons for the CalPERS state worker rate increase is the first year of a three-year phase in of lowering the discount rate from 7.5 to 7 percent. The discount rate next fiscal year is 7.375 percent.
Yet another complication is a five-year phase in of the rate increase resulting from the lower discount rate. As a result, the new actuarial report can project annual rates through 2023.
New actuarial valuations recommending rate increases for the pension plans of 1,581 local governments are expected this fall. The cities, counties and special districts in CalPERS have a wide range of funding levels.
This week Marc Joffe of the California Policy Center issued an updated report saying local governments will pay about $5.3 billion to CalPERS in the new fiscal year. He projects the payments to CalPERS will rise to $9.8 billion in fiscal 2022-23, an increase of 84 percent.
“In Fiscal Year 2015-16, at least 26 California cities and counties devoted over 10 percent of their total revenue to pension contributions,” said Joffe’s report.
“San Rafael, San Jose and Santa Barbara County shouldered the highest pension burdens — exceeding 13 percent of revenue. Major local governments that have recently surpassed the 10 percent pension contribution of total revenue threshold include Contra Costa County, Berkeley and Newport Beach.”
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 12 Apr 17
Calpensions 
April 12, 2017 at 8:04 pm
Notwithstanding CA’s Laws, Regs, Case Law, or Constitutional provisions, there are ZERO “solutions” to CA’s (and most other States’ and Citys’) pension mess without …. just as step #1 …… very materially reducing the pension accrual rate (by no less than 50%) for the FUTURE service of all CURRENT workers.
And THAT is just “step #1” because doing that ONLY stops digging the financial hole we are now in even deeper every day, leaving us to STILL address the already existing VERY VERY material underfunding for PAST-service accruals. Assuredly, there will be Cities that will be unable to do so (w/o reducing services or raising taxes to an untenable level) and PAST-service accrual will ALSO need to be reduced.
The insatiable greed exhibited by the Public Sector Unions/workers HAS consequences.
April 13, 2017 at 1:37 am
Hi Ed,
Agencies have a choice in how aggressive they want to be in funding their pension liabilities. These choices can have a profound impact on how much much tax payer interest is saved or lost by a chosen repayment schedule. While your article highlights those agencies that are contributing high portions of their revenues toward pension funding (a good metric by the way), your article does not make an attempt to measure how efficient their chosen payment schedule may be. For those that choose the smallest payment for their community, they may be deferring a significant amount of principal and interest for future generations, accruing all the while at 7-7.5%. While a 15 year mortgage may consume more of a household income, is still may be a financially prudent endeavor.
Consider the following further metrics in your analysis – On page 17 or thereabouts of of each agencies’ 2015 Valuation is their “30 Year Amortization Schedule.” If you were to divide the total expected payments by the projected principal balance at 6/30/17, you would obtain what some CalPERs staff refer to as the Amortization Efficiency Ratio (AER). Subtracting 1 from this ratio would result in percentage of interest paid on the outstanding principal. If you were to divide the principal by total payments and subtract 1, you would determine percentage of interest paid in relation to the total payments. I suspect comparing these metrics between agencies, would produce some surprising distinctions between agency choices and allow for more meaningful comparisons and conclusions.
SAMPLE COMPARISON OF ORANGE COUNTY CITIES
UAL Total Int.% of Interest %
City Bal.* Pmts.* AER Principal of Total Pmt
Newport Beach $273 $ 467 171% 71% 42%
O.C. City #2 $115 $ 212 184% 84% 46%
O.C. City #3 $610 $1,304 214% 114% 53%
O.C. City #4 $963 $2,126 221% 121% 55%
O.C. City #5 $527 $1,167 221% 121% 55%
O.C. City #6 $255 $ 567 222% 122% 55%
O.C. City #7 $359 $ 810 225% 125% 56%
* Millions
Respectfully Submitted,
Dan Matusiewicz
City of Newport Beach
Finance Director
April 13, 2017 at 2:20 am
Responding to Dan Matusiewicz’s above comment …………
Of course putting in more today will result in not only less principal repayment tomorrow, but also less interest paid.
But …… what you fail to factor into your analysis is that ALL of those incremental payments come from the Taxpayers (either today or tomorrow…. whatever the chosen pattern), and if a Taxpayer puts in say $12 today instead of $10 today, while THE PENSION PLAN will indeed earn more interest because it has $12-$10=$2 MORE dollars to invest, the Taxpayer in his/her own personal investments will lose an equal amount of interest because THEY now have $12-$10=$2 LESS dollars to invest …… perhaps to help fund the assuredly FAR SMALLER retirements
April 13, 2017 at 3:49 am
The comments above assume new taxes will be raised in order to accelerate payments on pension obligations reducing the opportunity cost of the taxpaying investor. This may very well be the case in some communities but the objective of addressing the issue early and aggressively is to mitigate likelihood of more drastic measures tomorrow. There is a high cost of waiting to address a long-term liability accruing interest at 7-7.5%. Waiting until tomorrow to address today’s problem will only make it more more difficult to solve down the road.
Admittedly, past promised benefits were indeed robust but unwinding past retirement promises in California is not currently legal. Future benefits have been cut by the Public Employees Pension Reform Act (PEPRA) but unfortunately this will take decades to have a meaningful impact on current costs and does nothing to reduce previously accrued benefits. The problem highlighted in the original article is very serious and should be addressed by agencies and taxpayers very carefully. Unfortunately the problem is more complex than some might believe and will certainly will take decades to resolve.
April 13, 2017 at 5:47 am
Quoting from dmatusiewicz above ….
“This may very well be the case in some communities but the objective of addressing the issue early and aggressively is to mitigate likelihood of more drastic measures tomorrow.”.
I understand that, but it is hard to disagree that CA pensions are FAR FAR more generous (in fact MULTIPLES greater in value upon retirement when factoring in not just the much richer formulas, but also the incremental value of the much younger retirement ages, and the COLA-increases … unheard of in Private Sector Pension Plans) than those of their Private Sector counterparts …. and by an amount FAR in excess of any lower cash pay that may be earned in certain Public Sector occupations.
That being the case, what you’re suggesting is that Taxpayers continue to stretch to fund UNJUSTLY rich Public Sector pensions.
I would rather see Taxpayer funds going towards supporting litigation (or initiative) efforts to end the (absurd) “California Rule” and VERY materially reduce the future service pension accruals of all CURRENT workers.
Granted we’ll still have to address the existing underfunding for PAST service accruals, but given how a large part of that problem arose …. via the retroactively granted Pension increases ala SB400 (and similar Local Laws) for which ZERO employee “consideration” was given …… there is at least a moral justification to reduce PAST service accruals as well (legal complications notwithstanding).
Where we agree, is that it’s a complex problem and will certainly be difficult to solve. But if you step back, the REASON for that difficulty is because Public Sector Unions/workers have been so eminently successful (via Public Sector Union BRIBES disguised as campaign contributions and election support) in not only getting pensions and benefits FAR greater than their Private Sector counterparts, but in having Laws passed to make the reversal of such inequity near impossible.
How widespread it will be, and how soon it will occur is debatable but assuredly there will be more (and much larger) CA City Bankruptcies, and one of those Cities in great distress will finally tell CalPERS to “go stick it”, default on their CalPERS obligations and reduce their workers pensions (perhaps including accrued amounts).
A bunch of articles just came out this week projecting a doubling of CA pension contribution over the next 5+ years, and that simply comes from the small 7.5% to 7% rate reduction. There is no question where this will go if we have 5 years averaging 5% or 4% or 3%, certainly a possibility give how overvalued the markets are today.
Those with an understanding of the math behind pensions know how we got here………..
(1) the DECADES-LONG intentional low-balling of TRUE pension costs (via unreasonably high liability discount rate assumptions) because Taxpayers would have wildly protested the granting of current pension levels if they knew the TRUE expected cost of those promises,
(2) the endless ratcheting up of promised pensions, the most damaging being retroactive ones such as SB400, and
(3) The myriad of games played …. spiking tactics, end of career promotions, the phony (or at least ludicrously easy-to-meet) “disabilities”, etc., etc., etc.
April 13, 2017 at 9:01 pm
I think everyone agrees that that previous benefits granted by SB400 were too generous but that event is in the past and has since been rescinded prospectively through PEPRA. While we both may not like the benefits granted by SB400 or how it was implemented, the notion that the problem could or should be solved by payment default and litigation is not a financial plan but a recipe for disaster, in my opinion. I would not feel prudent recommending such a plan to my or any other community. Agencies that have defaulted on their pension plans have not come out ahead as a result. They have simply traded one problem for a larger one.
I’m glad there was an acknowledgement of the underlying pension math. This is a math problem! And, there are very few levers to change the solution. And to be fair, the discount rate was never a secret and was appropriate for the time. I’m not sure anyone could have predicted the investment losses that occurred in in 2008 and subsequent years. In fact, CFA study guides suggest that some bank losses during the financial crises were 25 standard deviations below the mean. “To put this in perspective, if returns are normally distributed, a return that is 7.26 standard deviations below the mean would be expected to occur once in every 13.7 billion years.”
To play Monday morning quarterback today and say that the system intentionally hid the truth about what realistic discount rates would be in the future is absurd. Any sound investment advisor will tell you they cannot predict future interest rates.
It is simply time to move on. Communities should should work together to develop appropriate financial plans to deal with the crisis and NOT simply hope for payment default, State bailout or other legal remedies with nearly impossible odds of reversing past accruals.
April 13, 2017 at 10:14 pm
If I told you once, I’ve told you a million times, don’t exaggerate.
DECADES-LONG low-balling would have gone back to the eighties- nineties, when Treasury bill rates were 7-10% (15%?) DJIA had gains of 10-30%, and CalPERS (among others) was stepping in High cotton.
“endless ratcheting up of promised pensions”, was almost exclusively SB400, which, as the man says, has been rescinded.
Spiking tactics is at best a lurid exception to normal pensions, and incites public anger, but is a very small fraction of the pension costs. Also being strongly rescinded by PEPRA.
April 13, 2017 at 11:27 pm
Quoting dmatusiewicz ….
“I think everyone agrees that that previous benefits granted by SB400 were too generous but that event is in the past and has since been rescinded prospectively through PEPRA.”
“recinded prospectively” ? Most would interpret those words to mean that those retroactive increases were rescinded FROM THOSE THAT RECEIVED THEM. But we BOTH know that that is not so.
PEPRA ONLY reduced the pension accrual rate for NEW workers (and then by an amount that left them STILL far greater than the pensions granted comparable PRIVATE Sector workers). ALL workers hired before PEPRA’s effective date will CONTINUE to accrue pensions based on the higher pre-PEPRA formula until they retire, for some for perhaps 30 in the future.
It easy for supporters of Public Sector pensions to brush it off as being …. in the “past”. Well, the financial damage fro SB400 isn’t in the “past”. It’s here TODAY, and will continue to be a financial nightmare for perhaps 50 years, until all of those unjustly granted these RETROACTIVE pension increases (and in many cases, their spouses) die.
****************************************
Quoting ….
“And to be fair, the discount rate was never a secret and was appropriate for the time”
No, the investment return assumption of 7.5+% with ZERO risk on the downside (because the Taxpayers are looked at as the suckers in the equation who can be forced to eat such losses), was NEVER “appropriate”. It’s effectively a 7.5% Triple-A GIC, something not available to us mean mortals in the Private Sector since the 1980s.
***************************************
Yes, plans should be made, but those Plans should …. as just Step #1 …..FOCUS on elimination of the “California Rule”, VERY materially reducing the FUTURE-service pension accrual rate, and increasing the full/unreduced retirement age for all CURRENT Public Sector workers. Doing so is the ONLY effective “solution” to this pension mess, and not NOT doing so just means that we will continued to dig the financial hole we are now in DEEPER every day.
The goal should be Public Sector pensions EQUAL TO …… BUT NO GREATER THAN…. those typically granted Private Sector workers in jobs with reasonably comparable risks and requiring reasonably comparable education, experience, knowledge and skills.
Private Sector Taxpayers have be financially raped by the Public Sector Union/Politician cabal for FAR too long.
April 13, 2017 at 11:31 pm
SMD,
Would 2-decades be covered under “Decades-Long” ?
A decade is 10 years.
2017-(2 x 10) = 1997.
April 14, 2017 at 2:35 am
“The goal should be Public Sector pensions EQUAL TO …… BUT NO GREATER THAN…. those typically granted Private Sector workers in jobs with reasonably comparable risks and requiring reasonably comparable education, experience, knowledge and skills.”
Nope…
Simplistic tripe. The correct comparison is total compensation, not just comparable pensions. And not just comparison of the “average” public worker vs. The average private worker.
Back to the drawing board.
April 14, 2017 at 4:14 am
SMD, I agree, the Comparison should be on a :”Total Compensation” basis (wages + pensions + benefits). I HAVE called for exactly THAT in MANY comments before, and was speaking in hast above (when stating “pensions” instead of “Total Compensation”).
But ………….. when we compare Public Sector “wages” (as a element of that Total Compensation) we need to adjust for 2 things:
(1) Hours worked. SMD likes to point out that there are studies that show that PHDs and certain high level “professionals” in the Public Sector make less in cash wages that their Private Sector counterparts. To be honest I really don’t know. But what I AM comfortable stating (from MANY years working with such professionals in BOTH the Public & Private Sector) is that the average work week of MOST Private Sector “professionals” (e.g., Lawyers and CPAs) is EASILY in excess of 50 hrs/wk. And for MOST Public Sector professionals, it’s 40 hrs/wk (and less in the summer months). That means that such Public Sector professional that has wages of say $120K vs say $150K in the Private Sector is NOT underpaid in “wages” because he/she only works 4/5 as many hours and 4/5 x $150K = $120K.
(2) Measurable Productive Output. Many Private Sector “professionals” … our CPAs and Lawyers …… bill clients by the hour. From personal experience, they are VERY productive and don’t waste time surfing online or with casual chit-chat in the hallways. Their billed Clients wouldn’t stand for it. There is NO WAY (and supported by my experience working with BOTH groups) that Public Sector workers are as “productive” …… per hour….. as their Private Sector counterparts.
April 14, 2017 at 5:39 am
NO WAY!!!
“There is NO WAY (and supported by my experience working with BOTH groups) that Public Sector workers are as “productive” …… per hour….. as their Private Sector counterparts.”
Nyuck, nyuck, nyuck. Water coolers, Web serfers, billable hours. And your so-called experience trumps (see what I did there?) every major econometric study?
But wait!!!
“Based on a nationwide survey of state and local government employees in 43 of 50 states, Gallup found that 71 percent of the work force was “disengaged” or unenthusiastic about their jobs – and unwilling or incapable of improving their output. By contrast, only 29 percent said they felt fully engaged in their work and eager to improve on the services they provide.
Considering the large share of state and local government budgets devoted to personnel, Gallup said “disengagement” is costing state and local governments up to $100 billion a year – or more than most states’ total annual budgets.”
(Apathetic Workers in State and Local Government Are Costing Taxpayers Billions, The Fiscal Times, Jul 7, 2016)
Damnedable government workers…
Also…
Wait for it…
“More broadly, employee disengagement across the economy costs the U.S. economy roughly $500 billion a year, which suggests that the problem is just as prevalent — or more so — within the private sector.” (Yes, Virginia, there is a missing Clause. I very intentionally left out the next two sentences in this quote.)
“Measurable Productive Output.”? “…the problem is just as prevalent — or more so — within the private sector.”
Laughing Out Loud
April 14, 2017 at 1:36 pm
SMD,
How would you know how productive “professionals” are…… light bulb changing being among your responsibilities while employed in CA’s Public Sector?
Still doing your part to protect your Union “brothers” ….from the eminently justifiably pension & benefit reductions ?
April 14, 2017 at 1:49 pm
Quoting from a (CA Supreme Court) article just out …..
“The justices made no comment in agreeing to review a Dec. 30 decision by a three-member San Francisco-based appellate panel concluding that vested pension rights can be reduced or eliminated.
The case stems from a 2013 pension reform law, which eliminated the option of participants in the $311.8 billion California Public Employees’ Retirement System, Sacramento, to buy up to five years of retirement credits to enhance their pension benefit.”
“Airtime”, another of the way CA’s Public Sector Union/Politician cabal screw CA’s taxpayers.
Why are the unions fighting so hard to KEEP the ability to “buy” 5 years of service? It’s very simple, barbecue the “cost” to the workers is a VERY small percentage of the financial value of the increased service.
While less overt, financially, it’s no different than if CA’s self-interested, contribution-soliciting, vote-selling Elected Officials instituted an employee perk that allowed their workers to buy a $100,000 Porche but pay the price of a base model Honda Civic, and bill the balance to the Taxpayers.
CA’s Taxpayers should muster the guts to renege on ALL of these ludicrously excessive pension & benefit “promises”.
April 14, 2017 at 1:56 pm
Above …
“barbecue” should be “because” ….the wonders of Spellcheck.
April 14, 2017 at 5:25 pm
“How would you know how productive “professionals” are…… light bulb changing being among your responsibilities while employed in CA’s Public Sector?”
Not I, sir (or madam). I personally have a very limited frame of reference. As do you, although you apparently do not recognize that fact.
Tough Love: “There is NO WAY (and supported by my experience working with BOTH groups) that Public Sector workers are as “productive” …… per hour….. as their Private Sector counterparts.”
Why would anyone accept the opinion of one unknown but clearly biased observer in New Jersey and extrapolate that to an entire state, or nation of employees? Actual data is available, and “hours worked” is one of the many variables used in their comparisons.
Carl Sagan: “Extraordinary claims require extraordinary evidence.”
You may continue to state your opinions and I will continue to look for actual evidence to confirm or refute your claims.
When I do a web search for comparable salaries, none of the search engines ask what my work history is. You may recall that janitorial work, including toilet cleaning, were also among my work responsibilities. Somebody has to do it.
Tough Love…
April 14, 2017 at 6:26 pm
SMD,
I noticed that you didn’t comment about my claim that AIRTIME is another royal “screwing “of CA’s Taxpayers.
What? Letting that pass w/o comment? Are you at a loss for words to “drum up” some sort of justification for this abuse of the Taxpayers?
****************************************
***** Attention Robert Fellner, NPRI ******
I suspect that Robert Fellner, director of transparency research at Nevada Public Research Institute (the group that puts out all that juicy data on CA wages, and pensions) may read this Blog.
If you do, I suggest you put together a study of the true cost to taxpayers of “Airtime” in CA…… what the workers actually pay (their payment(s) accumulated with interest to their retirement date) vs the incremental “value” (i.e., lump sum present value) of the purchased service years. It would definitely be an eye-opener … and just more evidence of the insatiable greed of the Public Sector Unions/workers and their disdain for CA’s taxpayers.
It doesn’t need to be a major study. Just take say a dozen or so Police Officers who recently retired on the 3%@50 formula who actually worked for 25 years but BOUGHT via “airtime” 5 additional years (giving them pension service credit for 30 years), and work up the comparison as I described above.
April 14, 2017 at 6:47 pm
And Tough Love continues with the Private Sector off-topic comparisons:
“…COLA-increases … unheard of in Private Sector Pension Plans) than those of their Private Sector counterparts …. and by an amount FAR in excess of any lower cash pay that may be earned in certain Public Sector occupations.”
” in not only getting pensions and benefits FAR greater than their Private Sector counterparts”
“and then by an amount that left them STILL far greater than the pensions granted comparable PRIVATE Sector workers” etc.
The *reality* of the private sector… William McGuire of United Health gets a >$800 million retirement package for his 15 years of sucking up public Medicare, Medicaid, and TriCare taxpayer dollars as the head of United Health…
http://content.time.com/time/specials/packages/article/0,28804,1848501_1848500_1848464,00.html
The comparable PUBLIC Sector worker… perhaps is our former Governor Peter Barton Wilson, who draws a CalPERS pension of $71,264.28 a year, according to Transparent California.
And then there is the truth about the Private Sector pensions documented by WSJ Pulitzer winner Ellen Schultz:
http://www.retirementheist.com
The executives throughout the Private Sector redirected rank and file pension funds into their own retirement benefits, often resulting (or intentionally causing) bankruptcies. Right on through he 2010’s, not back in the 1980s etc. The Private Sector grabs a company’s pension fund, loads it up with the debt of future executive pensions, declares a crises, dumps the rank and file on the PBGC, and the executives run off with the old Pension Fund and stashes it in the Caymans or in Switzerland.
The influence of the Private Sector in fraud and deceit is far, far more effective than that of the Public Sector. And SB400 in California, which raised pensions retroactively for the Public Sector… was overwhelmingly supported by… *REPUBLICANS*.
Tough Love is based in New Jersey? If true, no wonder he can’t name a single California elementary school teacher who taught him and who now survives on a modest CalSTRS pension.
April 14, 2017 at 8:08 pm
Spension,
If YOU want to be a the policeman for Private Sector misdeed, that’s fine, but you cannot tell me that I must take on that roll. Berating me not NOT supporting YOUR pet-peeve (whether I agree with you or not) is absurd.
And the readers are STILL waiting for you to admit that you are a LIAR ……
************************************************
Readers… see link below with my post calling spension out as a liar:
Re-pasting:
Tough Love Says:
January 10, 2017 at 11:48 pm
Two very specific quotes from spension … both lies:
(1) When/where stated …..
October 31, 2016 at 9:02 in this link …..
What spension stated ….
“As you’ve said many times, the executives deserve to lift every dollar of their worker’s pension funds if they want, because, well capitalism.”
(2) When/where stated …..
January 9, 2017 at 12:20 am in this link …..
What was stated ……
“Tough Love clearly said leaders of the private sector like Milken, Madoff, Boesky, Enron etc were better than police officers and prosecutors.”
————————————–
Did I make the statement that spension quoted in his/her comment in THIS blog article, posted just above and time-stamped January 10, 2017 at 12:45 pm? Yes, and to have everything in one place for easy reference, I am pasting it here (in between the asterisks):
****************************
“Tough Love Says:
January 6, 2014 at 5:22 pm
Quoting Spension…..”Milken, Madoff, Boesky, Enron, etc show the level of ethics in your chosen profession, Tough Love. Why would anyone trust a single financial assertion by anyone in the private sector?”
Oh please ……. no matter how bad some wall street actors are, they don’t hold a candle to the art of thievery mastered by the Public Sector Union/politician cabal.”
********************************
It appears that spension believes that he/she can take that (rather benign “opinion”) and twist it into something false and derogatory, QUOTING me as the author or HIS/HER self-created statements.
——————————————-
spension,
You clearly have no ethics or moral compass.
To be clear. I am calling you out as a liar. While I strongly advocate for Public Sector pension reform, I did not (nor would I ever) make such statements.
If you can, prove me wrong by posting a clear link Site/Date/Time to those statements. Go right ahead, or crawl under a rock where other parasites reside.
I will continue to post this comment until you admit that your above comments were false and that you lied by making them.
April 14, 2017 at 8:42 pm
spension,
Thanks for the recommendation. I am about halfway through “Retirement Heist”.
In internet click-bait terms, it is “jaw-dropping”. Steal from the poor and give to the rich. And no one the wiser. It makes me very grateful for the protections in the California constitution, and for CalPERS.
When it comes to “spiking”, a well connected private executive can wheedle more in one YEAR, than a dozen safety workers (or more) can get in a lifetime.
Often in error,
Before Airtime, there was the ability to “buy back” military service time. Costs and payback are (were) the same for both programs. Except the service time was year for year. I could only buy the four years I actually served.
When I was first made aware of the program (late 70s), I did the math, just comparing the cost to the increased pension. My breakeven point was about age 82. If I lived longer, it’s all gravy. If I die at the expected age, or younger, I lose. The program may work out better for others, but I pass.
With 20/20 hindsight, I would have done much better investing in the market for that period. I didn’t do that either.
I’m not certain about the rules, but I understand it was advantageous for some safety workers who could retire at 50 with 25 years actual service and five air years. (It couldn’t be used as actual “time”, i.e. retire at age 45.)
What is this obsession you have with “screwing”? It is clear that, at least some of the time, the screwing is all in your imagination.
April 14, 2017 at 8:54 pm
And the mansplaining from Tough Love continues, in absence of manning-up and acknowledging the facts that the private sector greatly exceeds the public sector in:
1)Retirement benefits for comparable work (William McGuire versus Pete Wilson)
2)Use of political influence to access ill-gotten gains
Instead Tough Lough promulgates a myth that the public sector is way more generous than the private sector. To whom is the right question. The private sector screws the middle class, sure enough. Maybe the private sector’s model is Dr. Dao… the private sector drags you off the plane after you’ve paid up and confirmed your seat.
Where do you live, Tough Love? Do you live in California? Huh? You won’t answer. Do you just attack women like me? Is that a New Jersey thing? I suppose women were admitted to the University of California and to Stanford long before they were admitted to Princeton.
April 14, 2017 at 10:49 pm
Spension,
STILL trying to DEMAND that I address YOUR pet-peeve (the misdeeds of Private Sector executives). Earth to spension, that’s YOUR passion to pursue. I choose not to.
*********************
And the readers are STILL waiting for you to admit that you are a LIAR …………. or post a link with the Site/Date/Time of your SELF-CREATED comments that you attributed to me ……. quoted in my earlier comment above.
Still waiting……. go ahead, prove your NOT the LIAR that I claim you to be.
April 14, 2017 at 11:48 pm
Uh… you bring up the private sector all the time, Tough Love. Perhaps if you didn’t, I wouldn’t either. And where do you live? I’m a Californian through and through. No interest group pays me, and I criticize the public system as much as the private system, w/r to post retirement benefits.
The fact is simple: payouts for post-retirement packages greatly in the private sector greatly exceed those in the public sector. McGuire versus Wilson is proof. Until you address that, well, you are as influential here as, uh, flatus in a hurricane.
April 15, 2017 at 12:48 am
Quoting spension,
“Uh… you bring up the private sector all the time, Tough Love”.
I rarely bring up the “Private Sector”, in any context OTHER THAN how it’s Taxpayers are being financially raped by ludicrously generous pensions granted PUBLIC Sector workers.
And even if i did ….. does that mean I MUST satisfy YOUR pet-peeve and discuss the misdeeds of it’s Executive class? Get real.
******************
I’ll humor your stupid comment which follows, quoting ……
“The fact is simple: payouts for post-retirement packages greatly in the private sector greatly exceed those in the public sector. ”
Really ? Paying perhaps each of 100 Private Sector executives $10 Million too much (totaling $1 Billion) won’t make a dent in America’s economy, but paying EACH of 20 Million Public Sector workers $500K too much (totaling $10 Trillion) assuredly will.
******************
And we’re still waiting ……. go ahead, prove your NOT the LIAR that I claim you to be.
April 15, 2017 at 3:12 am
Well, Tough Love, you bring up the Private Sector, you gotta address its excesses… so the 20,000 private sector executives who disappear to Switzerland and the Caymans with $500 million each… that is $10 trillion, and William McGuire of United Health actually got more than $500 million… he got $800 million.
You bring up “comparable” and William McGuire is clearly comparable to Pete Wilson, our former Governor (had you ever lived in California, you would know that) who gets $71,264.28 a year.
Where do you live, Tough Love? New Jersey?
April 15, 2017 at 6:06 am
Quoting spension …..
“so the 20,000 private sector executives who disappear to Switzerland and the Caymans with $500 million each”
Clearly, you’re delusional.
April 15, 2017 at 1:52 pm
As usual, Tough Love, you provide a fact-free answer. When you can’t provide serious facts, you result to lashing out at those who do,
and name-calling, like all mansplainers.
Must be all those chemical fumes you inhale in New Jersey, where I will now assume you reside.
My facts are based on a Pulitzer-Prize winning Wall Street Journal reporter’s book:
http://www.retirementheist.com
April 15, 2017 at 2:30 pm
Nice review of The Retirement Heist at the American Bar Association:
http://www.americanbar.org/content/newsletter/groups/labor_law/ebc_newsletter/winter_2011_ebc_newsletter/11_winter_aball_ebc_kozak.html
April 15, 2017 at 5:52 pm
spension,
Thanks again for the ABA link. I am a little more than halfway through Heist, and my recurring reaction is, My gawd, if this is true, it is beyond despicable!
Apparently, there hasn’t been any significant rebuttal to her many charges.
Looking forward to chapter twelve:
“Unfortunately, for purposes of this book review, the remainder of this final chapter seems hurried and almost a let down: much of the current problems with corporate pension plans were self-inflicted; there will likely be dire consequences because of the prevalence of defined contribution plans in the workplace; it is reprehensible how public sector employees and their pension plans are being used as scapegoats for the budgetary crises in many state and local governments; the end. A little more thorough discussion of each of these topics would have been welcomed.”
“A little more thorough discussion of each of these topics would have been welcomed.”
A sequel would be welcomed. Thanks again.
April 15, 2017 at 6:21 pm
Spension,
You still INSIST that I join YOUR pet-peeve (the misdeeds of Corporate America’s executives). Sorry, but you cannot dictate what I choose to discuss. My “pet-peeve” if you will, is the unnecessary, unjust, unfair (to Taxpayers), grossly excessive, and very clearly unaffordable pensions & granted PUBLIC Sector workers.
And while there is indeed greed involved in may huge stock option payouts and bonuses of Corporate executives, America’s MIDDLE CLASS Private Sector workers rarely get any of that, and (while earning cash pay very comparable to their Public Sector counterparts) rarely get pensions & benefits with a value upon retirement even HALF (one quarter for Safety workers) that of Public Sector workers …… and all while THEY (Private Sector taxpayers) are called upon to pay for 80% to 90% of the total cost of the grossly excessive PUBLIC Sector Pensions & benefits.
*******************************************
April 15, 2017 at 9:49 pm
Perhaps…
You have read another copy/paste rant in various public pension blogs…
Ronald Stein:
“The international business world is intelligent enough to know that “defined benefits,” neither capped nor precisely quantifiable in advance, are financial disasters to any business, thus, all businesses focus on the known, i.e., defined contributions alone.”
(First of all, it’s a safe bet that any opinion that claims “all” (businesses focus on the known…) is hyperbole.)
Second, if even half of Schultz’s claims are true, Mr. Stein’s rant should be rephrased to “The international business world has determined there is nothing left worth (legally) stealing, good luck trying to retire on what crumbs we left on the plate.
So, yes, spension’s point is valid. Comparing public pensions to corporate executive pensions leaves government pensions looking anemic. Even the $100,000 club are pikers compared to these guys. And comparing public pensions to those “middle” and lower class private pensions of today is nuts. Those pensions and retiree health care benefits that haven’t been eliminated altogether have been reduced to peanuts. In most cases, not because they were too costly; often they were a victim of their own success. Many were OVER funded, costing their employers NOTHING, leaving a temptation to big to resist.
April 15, 2017 at 11:06 pm
S Moderation Douglas… glad you are reading The Retirement Heist… remember Ellen E. Schultz is a Pulitzer-Prize winning Wall Street Journal reporter… most likely all her claims are true, as well as another 4X more that she couldn’t get the very high level of confirmation that a distinguished Wall St. Journal reporter would require.
Tough Love regularly compares public sector pensions to the private sector pensions, but TL fails to mention why private sector pensions are so low: simply because executives in the private sector have robbed the pension funds. Schultz documents that phenomenon quite well.
And if I point that out… well… TL call is my “pet peeve”. No, the systematic destruction of the private sector pension system in the US is not a pet peeve, nor is using that destruction to justify a similar destruction of the US public pension system. Funny how TL never complains about the $1 trillion debt in the US Military pension system… although the US can deficit spend to correct that… well.. the US can just as easily print money to pay off any public sector debt at all… municipal, state, etc.
It is US Taxpayers who foot the bill for a huge fraction of the princely post-retirement benefits of executives in the PRIVATE SECTOR. Like William McGuire of United Health, most of whose >$800 million payout came from… Medicare, Medicaid and TriCare.
Also, the private sector dumped huge numbers of retirees on the PBGC corporation, likely to be bailed out by the US taxpayer. If not bailed out, well, the retirees who were robbed of their pensions by private sector executives will… end up on Medicaid, Medicare, and other forms of public assistance.
As usual, any fact that contradicts TL pushes him in one of two directions: 1)personal insults, 2)dissembling that fact into unimportance. He can’t deal with facts he doesn’t like and which contradict his prejudices.
Having said all that… a) some portions of the California public sector pension system indeed got benefits that are now way to high… usually with bipartisan Republican + Democratic support (like SB400), b)defined benefit pensions remain the most efficient, due to low fees (the DC industry is notoriously inefficient through their fees and really screws small customers) and due to the huge reduction in longevity risk (a DC plan to cover you living until 95 or 100 is super-expensive, but pooling in the DB plans makes that risk simply vanish).
Loads of DB plans in the US are doing just fine, way better than California… Washington State, Wisconsin, South Dakota, North Carolina, etc. DB plans are simply the most efficient post-retirement solution, but private sector abuse destroyed the DB plans there, for the most part.
April 16, 2017 at 12:03 am
Quoting SMD…
““The international business world is intelligent enough to know that “defined benefits,” neither capped nor precisely quantifiable in advance, are financial disasters to any business, thus, all businesses focus on the known, i.e., defined contributions alone.””
YOU call that a “rant”.
I (and I’m certain Warren Buffet) would call that dead-on-accurate.
In fact, in 1975,Mr. Buffet recognized the HUGE risks associated with DB pensions and warned his friend Katherine Graham (head of the Washington Post) about those risks.
http://www.gurufocus.com/news/226213/warren-buffetts-1975-letter-to-katherine-graham-providing-advice-on-pensions-for-the-washington-post/affid/81000
****************************
Quoting SMD ….
“So, yes, spension’s point is valid. Comparing public pensions to corporate executive pensions leaves government pensions looking anemic.”
I agree. Now compare those Public Sector pensions (AND benefits) to those typically granted MIDDLE CLASS Private Sector workers.
April 16, 2017 at 3:04 am
Quoting spension …..
” TL fails to mention why private sector pensions are so low: simply because executives in the private sector have robbed the pension funds.”
***********************************
And now the FULL “facts”………
Because there WAS some bad behavior re Private Sector funds in the 1980s (mainly associated with Company mergers or acquisitions), in the 1980s (yes in the 1980s) the IRS/Treasury Dep’t put in place an excise tax of 50% on any DB Pension Plan assets withdrawn for any purpose other than paying participant pensions (or for retiree healthcare, but then only if the Plan had a funding ratio over 125%).
Since that 50% excise tax was implemented …. in the 1980s …. all such misdeeds ended because no Corporate executive is willing to pay a 50% excise tax.
***********************************
And the readers are STILL waiting for you to admit that you are a LIAR …………. or post a link with the Site/Date/Time of your two SELF-CREATED comments that you attributed to me ……. quoted in my earlier comment above and time-stamped April 14, 2017 at 8:08 pm..
April 16, 2017 at 3:13 am
So read Pension Heist. As bad as spension depicts it, she still doesn’t do it justice. Taxpayer money? Much of the corporate deceit was robbing retirees of pensions and healthcare, not for the money per se, but for the quasi-legal tax advantages. Reducing or eliminating pensions was just collateral damage from the real and material goal of tax reduction. In other words, “We didn’t really want to rip off our employees, but it was the only way we could rip off the taxpayers.”
Always seems to come back to the taxpayers.
Now compare the Public Sector …..Total Compensation…. to MIDDLE CLASS Private Sector workers? Same as it always has been, lower echelon public workers, with pensions and benefits, earn more than those in the private sector. More highly educated public workers earn less than the private sector, and somewhere in the middle, depending on which (if any) study you believe, there is a large contingent of government employees who earn roughly the same as their private sector equivalents. Yes, even with the higher pensions and benefits… “roughly equal”. Not greedy. Not lazy. Not bribing elected officials. Not ripping off the taxpayers. Just doing their (our) jobs.
April 16, 2017 at 3:34 am
Tough Love…
“Because there WAS some bad behavior re Private Sector funds in the 1980s…”
You obviously have not read the book. Pension Heist was published in 2011. If anything, it is worse than the 1980s. Guess what, when DBs were on the way out, the corruption didn’t even slow down. Read how top executives have used DCs to rip off taxpayers and enrich upper management, still at the expense of the janitor and the clerk.
Lily Tomlin…
“No matter how cynical you become, it’s never enough to keep up.”
One of the things I have said before about the clamour over public compensation is that there is much more transparency in the public sector. If you think the compensation in Transparent California is exorbitant, ask the Nevada Policy Research Institute to include private sector total compensation collated into the list, sorted by total compensation, highest to lowest. (Leave out the names of private sector workers, you know, out of consideration for their privacy.)
April 16, 2017 at 4:08 am
Tough Love, perhaps you should read “The Retirement Heist” by Pulitzer Prize winning Wall Street Journal reporter Ellen E. Schultz. It refutes your assertions about the 50% excise tax. There are many, many ways that private sector executives have implemented, which avoid your ineffective excise tax, to drain the pension funds that were intended to pay out to the rank and file.
http://www.retirementheist.com
And readers are still waiting for you to admit that Ellen E. Schultz knows way, way more than you.
April 16, 2017 at 4:34 am
TL…
“And now the FULL “facts”………”
“Since that 50% excise tax was implemented …. in the 1980s …. all such misdeeds ended because no Corporate executive is willing to pay a 50% excise tax.”
May we quote you on that?
Laughing Out Loud
April 16, 2017 at 9:37 am
The nice thing about “Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers”, is that it is available to read free from your local public library.
Greenhut’s “Plunder” isn’t in your library. It’s available from Amazon for $14.99. Don’t waste your money.
“Public employees have become the new American elite. In the past, Government workers earned less money but had slightly better job security and benefits than Americans working in the private sector. These days, government workers not only earn more than other Americans, but they have vastly superior benefits, including pension plans that often allow them to retire as early as age 50 with 100 percent or more of their final year’s salary. These pensions often to $100,000 a year and come with cost of living adjustments and free lifetime medical care. Getting a government job and sticking with it is like winning the lottery.”
That’s the book in a nutshell. A rant. Save your fifteen dollars.
April 16, 2017 at 11:37 am
TL…
“YOU call that a “rant”.
I (and I’m certain Warren Buffet) would call that dead-on-accurate.”
How certain are you, “Never in doubt”?
As a result of Warren Buffet’s letter, did Katherine Graham drop the “financial disaster” defined benefit system and “focus on the known, i.e., defined contributions alone.” as Mr. Stein insists “all businesses” are doing?
Apparently not. Did he specifically advice her to drop the defined benefit, or just caution her on how it should be properly run?
…
“The 1975 Buffett memo that saved WaPo’s pension”,
(Stephen Gandel, Fortune, AUG 15, 2013)
” One of the (many) things that surprised people about the recent $250 million sale of the Washington Post to Amazon AMZN founder Jeff Bezos was the health of the Washington Post’s pension plan. At a time when most pension plans are struggling, the Post has $1 billion more than it needs.”
(I believe even Berkshire Hathaway still has a DB pension. At least, according to David Crane it does.)
April 16, 2017 at 4:00 pm
SMD,
Why not compare the “richness” (BOTH the formula AND provisions, such as the Normal/unreduced retirement age, and the existence of COLA increases) of Ms Graham’s Washington Post DB Plan to that of CA’s Public Sector workers?
How many MULTIPLES greater is CA’s pension Plan? THAT is why her Co’s plan worked out well …. because it didn’t “over-promise”.
April 16, 2017 at 7:00 pm
Why not compare the “total compensation” of WAPO employees to the total compensation of California Public Sector workers?
April 16, 2017 at 7:47 pm
SMD,
While I haven’t read the book Retirement Heist, I have read several book reviews, all very critical of America’s executives.
What comes out VERY VERY clearly is that this “heist” relates to the MOST Senior Corporate Executive (and then only from the small % of all companies that have DB pensions, noting that none of the high-tech companies do).
And with IRS stats showing us that it takes less than $500K in annual income to be in the top 1%, those mentioned in Retirement Heist with their multi-multi-Million dollar pensions/payouts likely represent the top 1/20 of the top 1% …. and perhaps even less than the top 1% of the top 1%.
Tell me how ANY of this …. the misdeeds (call it thievery if you like) of a super-tiny % of Corporate Executives …… justifies Public Sector pensions that are ALWAYS multiples greater (often 5 TIMES greater for safety workers) in value upon retirement than those of the 99.9+% of Private Sector workers (it’s MIDDLE & LOWER CLASS) who aren’t Corporate executives?
And no, any lower Public Sector cash wages (under a true apples-to-apples comparison) in some occupations doesn’t come within miles of the HUGE advantage Public Sector workers gain by way of their ludicrously generous pensions (AND retiree healthcare benefits).
ALL of your points are simply driven by greed and self-interest.
***********************************
In the end-game, the MATH (not Laws, not the Constitution, and not the Courts) will determine how this pension mess shakes out, and it doesn’t look good for Public Sector workers.
April 16, 2017 at 10:53 pm
Never in doubt…
“Tell me how ANY of this …. the misdeeds (call it thievery if you like) of a super-tiny % of Corporate Executives ……”
Remember… Ronald Stein?
“The international business world is intelligent enough to know that “defined benefits,” neither capped nor precisely quantifiable in advance, are financial disasters to any business, thus, all businesses focus on the known, i.e., defined contributions alone.”
They were NOT “financial disasters”. Many were overfunded, creating an irresistible pot of money to be raided. The small percentage of Senior Executives who benefited are not the gist of the story. The point of the story is what they did to perfectly viable pension and retiree healthcare systems. They couldn’t be satisfied to rake off the crème, They entirely decimated the systems.
Because of these “legal” thefts, there are, as you say, fewer private pensions and retiree healthcare plans, and the ones that remain are inferior. This is what you want to compare public pensions and benefits to… private benefits that have been destroyed by greed. Greed far greater than any public sector union could manage.
Defined Benefits were destroyed not because they were unsustainable, but because they were irresistible.
Never in doubt…
“And no, any lower Public Sector cash wages (under a true apples-to-apples comparison) in some occupations doesn’t come within miles of the HUGE advantage Public Sector workers gain by way of their ludicrously generous pensions (AND retiree healthcare benefits).”
“in some occupations”, yes, public compensation is greater than private. In most occupations, though, private compensation is equal to or greater than equivalent public sector workers. Public safety is a separate case, but in all other occupational comparisons, all the major studies agree, Or, put more bluntly, all disagree with “Never in doubt.”
April 17, 2017 at 1:11 am
Let’s see… the top 1% of the top 1% of 320 million Americans is.. 32,000 people. If they all got William McGuire payouts ($800 million)…. 25.6 trillion dollars. That is a big deal.
Additionally, by plundering the private pension system, the top execs set in to motion propaganda that DB are unreasonable and unsustainable. Which is false… much of the world and many public and private DB plans in the US are doing just fine. Benefits have to be kept properly within a proper range… have to do proper modeling of the likelihood of downturns, like, 1933, 2008, etc.
Meanwhile, of course the same financial wizkids want to drive everybody into DC plans, so that the financial industry can grab huge fees for poor returns.
April 17, 2017 at 2:28 am
“Highway Patrol members contribute 11.5 percent of pay to their pensions and do not receive Social Security. Miscellaneous members, who do receive Social Security in addition to their pensions, contribute 6 to 11 percent of pay, many of them at 8 percent.”
One way to help improve the pension funding status is to keep increasing the employee contributions. This encourages the older employees to retire sooner. As they retire, they can be replaced by new employees at lower salaries and who will be under the less generous PEPRA.
April 17, 2017 at 3:40 am
Spension,
You are mathematically illiterate ……….
How many of Americas 320 Million residents are children or retired (half ?)
How many of the remainder are students, not working ?
How many of the remainder are sick or disabled and cannot work?
How many of the remainder cannot (or do not want to) find a job.
********************
I’ll make it easy ….. A BLS search tells us that there are 124 Million Private Sector workers (as of March 2017).
https://data.bls.gov/pdq/SurveyOutputServlet
Per a CNN article 4% of Private Sector workers are covered by a DB Plan
So now we’re down to 124 M x .04 = 5 Million
If we took your 1% of 1% of that 5 Million, we’d get …… 500
Yup 500.
Sure there will be a VERY few that will get a $100 Million, but MOST will get under $5 Million
**************************
Another BLS Search tells us that there are (as of March 2017) 5.1 Million State Gov’t workers and 14.4 Million Local Gov’t workers.
https://data.bls.gov/pdq/SurveyOutputServlet
Add up all those ludicrously excessive DB pensions and we INDEED have a MASSIVE problem
****************************************
******************************************
Neither one of you is willing to DIRECTLY address my question:
“Tell me how ANY of this …. the misdeeds (call it thievery if you like) of a super-tiny % of Corporate Executives …… justifies Public Sector pensions that are ALWAYS multiples greater (often 5 TIMES greater for safety workers) in value upon retirement than those of the 99.9+% of Private Sector workers (it’s MIDDLE & LOWER CLASS) who aren’t Corporate executives?
And no, any lower Public Sector cash wages (under a true apples-to-apples comparison) in some occupations doesn’t come within miles of the HUGE advantage Public Sector workers gain by way of their ludicrously generous pensions (AND retiree healthcare benefits).”
April 17, 2017 at 3:57 am
Tough Love… as usual, you change the goalposts… none of those qualifications were in *your* initial statement of the top 1% of the top 1%. Now you backpedal.
No doubt the corporate theft by executives is in the many trillions of dollars.
April 17, 2017 at 5:35 am
Top 1% of the top 1% is 15,000 households, not 500
https://www.bloomberg.com/politics/articles/2015-05-27/top-0-01-of-u-s-households-gained-as-income-concentration-rose
Given the typical household size of of 2.58… 38,700 people in the top 0.01%. My estimate was 32,000.
Tough Love’s estimate of 500 is way, way off.
April 17, 2017 at 6:49 am
spension,
Your as thick as a rock,………
I said the top 1% of the top 1% WHO HAVE DB PLANS… not all of them.
And 4% of YOUR 15,000 is 600 … pretty darn close to my 500.
April 17, 2017 at 1:58 pm
Nope, you did not say that, additionally now the 4% is due to decades of destruction and theft of DB by execs. Was nearly 100% 40 years ago. You just can’t stop the insults and mansplaining, can you?
And in what State do you reside?
April 17, 2017 at 3:29 pm
Spensiopn,
Can’t even admit when you goofed. Pretty pathetic (as well a mathematically illiterate).
Quoting from my calc of the 500 above:
*******************************************************
“I’ll make it easy ….. A BLS search tells us that there are 124 Million Private Sector workers (as of March 2017).
Per a CNN article 4% of Private Sector workers are covered by a DB Plan
So now we’re down to 124 M x .04 = 5 Million
If we took your 1% of 1% of that 5 Million, we’d get …… 500
*********************************************************
Do you not see the 4% and the 0.04 multiplier that WAS USED in calculating the final 500 ?
And then just MORE “excuses”.
April 17, 2017 at 4:47 pm
You are goofing. The 4% is *after* systematic destruction of the private DB pension system by the private sector executives who lived, we now know, trillions of dollars. Your numbers prove that the private sector greed dwarfs that of the public sector.
In what State do you reside? Is it California? If not, why are you commenting on a “Cal Pensions” blog?
April 17, 2017 at 7:24 pm
My home State is NJ. CA is worsein formula benefits but lower in wages. We (and MANY MANY other States and Cities) will become insolvent because of the insatiable greed of the Public Sector workers and our self-interest Elected Officials more than willing to accept BRIBES disguised as campaign contribution and election support this THEFT of Private Sector taxpayer wealth.
I comment on many Blogs because it’s a NATIONWIDE problem. Those who call for Public Sector pension reform must support each other’s efforts.
April 17, 2017 at 8:32 pm
The biggest *nationwide* problem is the >$1 trillion short fall in **MILITARY** pensions, which allow retirement at 37, and give very rich benefits to the brass… never hear you complaining about that… instead you focus on another state’s problem, and not on that obvious nationwide issue.
April 17, 2017 at 8:58 pm
spension,
If excessive Military pensions are your concern, your free to protest such pensions …. just as I am free to protest what I see as a far rigger (and more immediate) issue, the grossly excessive, unjust, unfair (to Taxpayers) and clearly unaffordable Public Sector pensions & benefits.
While there are limitations to the printing of money, unlike the Federal Gov’t, States & Cities CANNOT print money.
April 17, 2017 at 11:09 pm
Well, Tough Love… $1 trillion debt in the military pension system, with >$200,000 per year for top brass, shows that the military pensions are “grossly excessive, unjust, unfair (to Taxpayers) and clearly unaffordable Public Sector pensions & benefits.” That debt is on the shoulders of *both* NJ residents and for California residents. But you are for some reason concerned with California Pension debt that isn’t on your shoulders since you are a NJ resident. Very odd.
That you have no objection to our shared US debt, perhaps, because it is not the dollars and cents which concerns you… not sure what it is other than the dollars and cents, but most likely, you don’t care one whit about the dollars and cents, and you really just want to beat up on *certain* public sector employees (those who are neither military nor police) because you don’t like their political party. If you cared about the dollars and cents you’d complain equally about the excesses of *all* public sector employees, independent of politics. It just so happens that the public sector employees you don’t complain about… military brass and police… happen to be pretty Republican. What a coincidence!
The Federal Government is absolutely free to print money and hand it over the cities and states. The Federal Government, after all, prints money and hands it over to Goldman Sachs, Wells Fargo, BofA without concern for it ever really being paid back.
That the Federal Government favors the big banks with this largesse, and chooses not to favor struggling local governments, well, that is the source of a huge amount of anger in our country.
April 17, 2017 at 11:18 pm
spension,
It’s REALLY easy to understand………..
Two people find comparable jobs (one Public and one Private) ANYTIME during at least the last 15 years (that’s MANY millions of workers). The Public Sector worker get a Final Average Salary DB pension and the Private Sector workers gets a 401K Plan with a 3%-of-pay match.
Under Public Sector DB Plans commonplace over those years, the non-safety worker’s pension requires a level annual TAXPAYER contribution of 25% to 35% of pay to fully fund over their working careers (using reasonable and appropriate valuation assumptions and methodology) and the Safety worker’s pension requires a TAXPAYER contribution of 40% to 50% of pay.
That absolutely HUGE Public Sector pension/benefit advantage must disappear ………. completely …… other than if and where (in certain highly professional occupations), Public Sector workers can demonstrably show lower cash wages (with no less hours worked per week, and equal “productivity”).
Private Sector Taxpayers have been suckered long enough.
April 18, 2017 at 12:08 am
Yes, in the Private Sector, William McGuire of United Health gets >$800 million in compensation.
While frmr Governor Pete Wilson of California gets $72,000 a year.
The Private Sector pays holders of comparable jobs far, far, far, far more in benefits, amounting to trillions of dollars of waste in taxpayers money from Medicare, Medicaid, TriCare, and all sorts of other sources.
April 18, 2017 at 3:26 am
spension.
You’re not listening …. because you have no good answer.
*****************************************
Quoting spension …
“The Private Sector pays holders of comparable jobs far, far, far, far more in benefits, ”
Yor’re pulling my leg. Even YOU can’t be THAT stupid.
April 18, 2017 at 4:54 am
McGuire versus Pete Wilson. QED, you have no refutation of that example and the consequent trillions siphoned off by private sector execs. All you have is unempirical insults TL.
April 18, 2017 at 10:46 am
spension,
I don’t think you have to go to McGuire for an example. You don’t have to go to CEOs of fortune 500 companies. There are thousands of mid level and top level managers of medium size companies in California who make more in wages AND pensions than the governor or any elected official.
One of the big “outrages”, according to some, is the salary and benefits of the typical city manager, $250k to $400k per year. In any major city, you will find hundreds of private sector execs who make more… Much more.
April 18, 2017 at 2:50 pm
spension,
Clearly this discussion is a waste of time because you actually believe that a few Private Sector executives ripping off EVERYONE “justifies” the enormous ripoff of the entire Private Sector middle class/lower classes by forcing them to provide grossly excessive compensation to it’s Public Sector workers ….. and all enabled via Public Sector Union BRIBES (disguised as campaign contributions and election support) given to our self-interested, vote-selling, contribution-soliciting Elected Official to support the Public Sector Union/Worker desires.
April 18, 2017 at 7:45 pm
I don’t say “justifies”. I just say your claims of private sector penury in post-retirement benefits are not accurate. But you make those claims in defiance of the hard facts. Your choice to look like the Emperor with no clothes.
April 18, 2017 at 7:46 pm
SMD… yes, of course. But you can hang your hat on McGuire versus Pete Wilson, names, numbers, everything available. When TL confronts that, he can’t run and hide.
April 18, 2017 at 11:02 pm
spension,
Your reference to $800 Million in compensation for UHC CEO McGuire peeked my interest.
It turns out that the $800 Million was the value of exercised UHC stock options that had very materially increased in value over his long career at UHC.
But it tuns out that he was doing something illegal …. picking the dates of the Option Awards so as get them at the lowest price possible. That cost him dearly . He had to give them ALL back. Details follow:
https://www.law360.com/health/articles/41799/ex-unitedhealth-ceo-to-pay-800m-in-settlements
But had he not cheated on the Option dates, while clearly huge and hard to see how awards that HUGE could be justifiably, those “paying” for it were UHC shareholder ….. NOT the Taxpayers.
**************************************************
Excessive compensation of Public Sector workers cheats the TAXPAYERS.
April 19, 2017 at 1:39 am
And where does the UHC shareholder value originate? Medicare, Medicaid, and TriCare paid by… the US Taxpayer.
April 19, 2017 at 3:46 am
spension,
UHC “shareholder value” derives from profits on the sale of the company’s products & services, so you could say that CUSTOMERS pay more than they would otherwise pay if an excessively compensated executive was not excessively compensated.
Unless that business is a monopoly, it’s “prices” are constrained by competition …consumers can shop elsewhere.
I still see very little link to the Taxpayers. Sure, Gov’ts at various levels likely buys some of UHC’s products and services. but they CHOOSE to do so because (at least theoritically) they believe the prices they pay are fair.
Hardly comparable to excessive Public Sector Compensation which is a direct and unjustified hit to the Taxpayers.
———————
Also, you need to clarify your thinking …..
UHC is NOT the “provider” of MEDICAL services (or the manufacturer of medicines sold) to Medicare, Medicaid, or Tricare. They are essentially a claims administer…… an intermediary BETWEEN those receiving medical services or medications and the ACTUAL providers (doctors, hospitals, drug manufacturers, etc.). UHC’s profits are come from providing those service as an intermediary.
April 19, 2017 at 1:27 pm
Sorry, without Medicare, Medicaid, and TriCare, the whole sorry “private” insurance industry would be 100X profitable. It is a cost+ operation paid for by taxpayers. No other industry (except defense procurement) in the US operates that way.
April 19, 2017 at 5:29 pm
meant 100X less profitable.