$76k/MONTH pension -- NYTimes article

[wenchsenior]

Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.

Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed?  On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).

This is how civilian federal pensions work.  You have to meet a combo of years worked and age requirements to draw a pension,  and then it is docked a certain percentage per year until you meet the full requirement 'combo' of minimum age and/or years worked. For example, my husband just became eligible to take his pension at age 56 (minimum retirement age), but it would be docked 30% if he took it. Not to mention that it wouldn't be very big if he took it now, because it scales up with years served.  The soonest he can take it without penalty is age 60 if he has at least 20 years of service. 

It's fine to screw around with those formulas to make them a bit stricter, but it isn't like restricting access to pensions is an unknown concept.

This is why those stupid memes about members of Congress retiring with "THEIR SALARY AND FREE HEALTH CARE FOR LIFE OMG" make me laugh.  Congress has very good benefits for sure, but nowhere near as great as the angry public fantasizes that they do.

ETA: This thread got me thinking

1) that I suspect pensions will eventually go by the wayside in favor of 401K plans (hopefully well administered, like the federal one). Ideally, you would want automatic enrollment up to the match, with opt out provision being the default. 

2) I could also see potentially setting up pension restrictions such that they would be reduced based on some amount of earned income over a baseline, which would encourage people to wait to take them until they really were retired or mostly retired.

[mm1970]

Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.

Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed?  On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).

I think your callous point about what not caring what was negotiating misses an important point; often the employee was not the one doing the negotiation, and he or she took the job based in part on the benefits promised in good faith. What you are basically suggesting is that we ignore contracts made to one party in good faith because you do not care for how other entities negotiated them. In short you want to ignore the rule of law.

Thinking out loud here, how is this any different than social security?

If I retire at 67 and die at 67.5, then I basically lose out on all that social security.


I know (think?) some pensions, like social security, have survivor benefits, yes?  But let's say you aren't married and don't have minor children...then, it's basically all gone.  No?  Probably depends on the pension.

[DreamFIRE]

Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.

Yes that makes sense.  I know a cop who just retired at 52 with a full pension.  While I've been saving 70%+ of my income for years, I still won't have it as good as him.  Being a cop is usually not that physically demanding.  This guy is like a spring chicken.  Firefighters, that's another matter.

I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary.  This has gone on way too long.  In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more!  The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits.  It's crazy!

That's funny. Our firefighters spent 1/3 of their shift sleeping and the other 2/3 washing fire trucks and BBQing.

come on out to Calif or any western state during wildfire season (which in the SW states is year round) and I think you'll see firefighters in a different light.

As for public pensions - not all are unionized. My weird little agency wasn't.

Agreed.  Also, there's also a much higher risk of cancer for firefighters.

[nereo]

The chart speaks for itself.   Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

I'm surprised people don't understand it in one respect, but at the same time, I'm not surprised.

When we were asking about the chart, we were being polite. Objectively it's a poorly made chart.  If any of my students tried to turn that in, they'd either get no credit or a 're-do'. For starters, the data source is not given.  Second, as others have pointed out 'average' is at best ambiguous. Which average? the mean? median? mode? How was total compensation calculated? Which job's are used in the analysis (i.e. what is the inference space)? Then there's the omre nit-picky stuff like "what are the estimates of variance?" and 'where the hell is figure 1"?

Most of us here are genuinely interested in hearing various arguments, particularly when they are backed up with good data. But this isn't that.

[wenchsenior]

Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.

Your conviction that pensions should only be paid out at age 67 is interesting, but not one I'm prepared to get behind. For starters it assumes way too much about a person's life expectancy. If you are in poor health or get diagnosed with terminal cancer, well TFB - you lose out on all the money you contributed?  On the other hand, I do understand how someone drawing a pension in their 40s could be given an order of magnitude more than someone starting their pension at age 67. That's why many pensions have a minimum start age, and benefits frequently scale with the year you first take distributions (much like SS).

I think your callous point about what not caring what was negotiating misses an important point; often the employee was not the one doing the negotiation, and he or she took the job based in part on the benefits promised in good faith. What you are basically suggesting is that we ignore contracts made to one party in good faith because you do not care for how other entities negotiated them. In short you want to ignore the rule of law.

Thinking out loud here, how is this any different than social security?

If I retire at 67 and die at 67.5, then I basically lose out on all that social security.


I know (think?) some pensions, like social security, have survivor benefits, yes?  But let's say you aren't married and don't have minor children...then, it's basically all gone.  No?  Probably depends on the pension.

Yes, the federal one is structured to pay 50% benefits to a qualifying spouse or in some cases, dependent children.  Not sure if there are restrictions on how long the kid gets it, absent a surviving spouse.  Maybe until 21? Not my circus, so I never looked this detail up.  You take a 10% overall cut to pension from the start if you opt for the survivor option. If you opt for no survivor option, the pension stops upon your death.

[maizefolk]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

[DreamFIRE]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

[nereo]

Thinking out loud here, how is this any different than social security?

If I retire at 67 and die at 67.5, then I basically lose out on all that social security.


I know (think?) some pensions, like social security, have survivor benefits, yes?  But let's say you aren't married and don't have minor children...then, it's basically all gone.  No?  Probably depends on the pension.

I suppose this comes down to whether you consider SS to be the same as a pension. On one hand both provide income ostensibly for senior citizens and those that can no longer work. Both use wages taken from workers' paychecks as a means of funding distributions.

However, SS is designed to cover as many people as possible. Unlike pensions, SS isn't tied to a single job. Likewise, payouts are backed by the federal government and not to any private company or local government.Unlike most pensions you qualify for SS after working as few as 10 years in your entire life (earning the requisite 40 credits). This is true even if you are self-employed. While higher earners get more SS benefits in absolute terms, lower income individuals get more as a percentage of their lifetime income - something that's rarely (if ever) seen in the pension world.  And of course as has been pointed out here, if you work 20 years for one company and 20 for another one can earn two pensions for 40 years of service (often based on your salary during your best 3 or 5 years), whereas SS is calculated based on your average of your highest 35 earning years.

To me they seem like two very different beasts, designed for different social purposes. I'd love to see all pensions phased out completely, but I would like to see only moderate changes to SS.

[wenchsenior]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

:head:desk:

[maizefolk]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

Nope, I'm saying to say that in order to look at trends over time, we need to be comparing workers who are doing the same kinds of jobs at each time point.

And if the total number of federal government workers is decreasing, the mix of jobs being done by the total population of federal government workers is also changing.

If you look at the average English language fluency in population of the European Union before and after the UK leaves the Union, you'll see a major downward trend, but that doesn't tell you anything about how english language fluency is actually changing.

If you look at average annual worker compensation at Amazon.com, you'll also see a major downward trend. But that doesn't mean people at Amazon were taking pay cuts, it means they have been hiring more and more warehouse workers, so the ratio of highly paid programmers to less well paid hourly workers has been changing over time.

[DreamFIRE]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

:head:desk:

Lame.

[nereo]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

That's not actually true, as maizeman and I have been trying to point out. When you say "average" I'm going to assume you mean the arithmetic mean, because you (and your graph) have been unclear on that. The mean is the arithmetic mean is the sum of all those sampled divided by the sample size. It's useful if you have a normal distribution (you've got roughly as many people earning above the mean as below it).
But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year. Earlier maizeman showed how the percentage of people in the federal workforce has been declining relative to the total labor market and pointed out that this was primarily driven by hiring freezes (which by effect reduces the new hires, which also make less money).

[DreamFIRE]

Also, the absolute number doesn't matter as far as my chart because it's using an "average" pay, not a combined earned dollars.

Absolute numbers do matter if they are indicating that the composition of the population being used to calculate the average is changing over time.

I am surprised you don't understand that.

Are you suggesting using the total combined income all workers instead?  That's totally illogical.  By using average, it doesn't matter how many people, because you're using, well, the average.   Some of the higher income private sector workers making many millions of dollars in income will bring the average up some, but lower income workers will bring the average down some as well.  What we are left with is an average of all workers, regardless of the quantity of those workers.  That is my point.  It's pretty simple really.

That's not actually true, as maizeman and I have been trying to point out. When you say "average" I'm going to assume you mean the arithmetic mean, because you (and your graph) have been unclear on that. The mean is the arithmetic mean is the sum of all those sampled divided by the sample size. It's useful if you have a normal distribution (you've got roughly as many people earning above the mean as below it).
But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year. Earlier maizeman showed how the percentage of people in the federal workforce has been declining relative to the total labor market and pointed out that this was primarily driven by hiring freezes (which by effect reduces the new hires, which also make less money).

You must have missed my post above:

I commented on the part of maizman's chart that lined up with mine was relatively flat.  You shouldn't compare a chart going back decades with one going back a much shorter time frame unless you isolate the longer period's chart to the time frame reflected on the chart with the shorter time frame.  It was the pay and total compensation that has been going up.

[nereo]

I didn't miss it.  You are trying to compare charts where one of the charts (the one you posted) is ambiguous at best and more than likely intentionally deceptive. There's an saying in statistics: you can't get a meaningful relationship with bad data.

[maizefolk]

But here's the problem with using arithmetic mean over time - if your population is changing, your estimate of the mean cannot be compared year to year.

Here's my favorite example example of your point, nereo.

A few years ago, there was a bunch of press coverage about a paper that came out which found that 45-54 whites were dying more often than they used to. (This was the "deaths of despair" paper.) However, it turned out about half of the apparent increase in death rate for 45-54 year olds was because the average age of 45-54 year olds in the USA was increasing over time as our overall population aged.

More 54 year olds and less 45 year olds = higher annual death rates for 45-54 year olds even if there was no actual change in the age at which individual people were dying.

Source: http://andrewgelman.com/2015/11/06/what-happened-to-mortality-among-45-54-year-old-white-non-hispanic-men-it-declined-from-1989-to-1999-increased-from-1999-to-2005-and-held-steady-after-that/

[JLee]

Pensions should only be paid out at retirement age: that would be 67 years old at this point. That's why double dipping is a scam: pensions are for retirees, not full-time, highly compensated employees. The point of a pension is to fund living expenses while not working, not help a cop buy a new fishing boat on his 55th birthday. Public employees should have their pension benefits decreased for claiming them early (before 67). I don't care what you "negotiated", it wasn't realistic and was a product of corruption, not real negotiations. Maybe physical jobs like police and fire need an earlier retirement date (probably not though), but teachers and other white collar workers have no such need.

Yes that makes sense.  I know a cop who just retired at 52 with a full pension.  While I've been saving 70%+ of my income for years, I still won't have it as good as him.  Being a cop is usually not that physically demanding.  This guy is like a spring chicken.  Firefighters, that's another matter.

I think all pensions should be changed into a system similar to Social Security that most private sector workers are stuck with, and offer a 401K type plan with a "partial" match up to 4% of salary.  This has gone on way too long.  In my state, taxes have been increased 65% to pay for state pensions & retiree healthcare, and they want even more!  The rest of us have to keep working longer for less take home pay so the government workers can keep retiring in their 50's with generous pensions and healthcare benefits.  It's crazy!

That's funny. Our firefighters spent 1/3 of their shift sleeping and the other 2/3 washing fire trucks and BBQing.

come on out to Calif or any western state during wildfire season (which in the SW states is year round) and I think you'll see firefighters in a different light.

As for public pensions - not all are unionized. My weird little agency wasn't.

Hey I'm not the one generalizing an entire career field. ;)

[Purple Economist]

Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.

https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp

What I'm still not understanding is how these practices are hurting me as a taxpayer. As I understand it, the government is paying out a pension either way, and it is hiring a person to do a job either way. This seems to be a legal way for some individuals to enrich themselves.  Unless there's a cost, I don't see what is worth getting upset about.

The real issue seems to be the life-time nature of pensions. Given that we've decided pensions should never 'run out' (particularly at the end of one's life) we have this problem of vastly unequal lifetime distributions. If someone works a job for 25 years and retires in their 40s, s/he could collect benefits for 50 years, or twice the length of his/her working career. Another could work the same amount at the same job but start at age 42 and retire at 67. That person might only get a decade of benefits (or much less). Vastly different lifetime compensation for the same amount of work.

Many pensions try to remedy this by requiring the individual to be a certain age (e.g. 55 years old) before taking a pension. But that doesn't preclude the individual from working a second job, and it seems enormously unfair to the individual to tell him/her "you can't work because you already have a pension".  Under such circumstances what's the proper thing to do?  Prohibit them from working? Prevent them from retiring? Obviously both are absurd suggestions.

To me, the problem is with offering lifetime pensions at all. FWIW this was a core rational behind IRAs and 401(k) plans when they were proposed.

As a one-off, you're not worse off as a taxpayer.  However, the problem is how people change their behavior when the situation is not a one-off.  In economics, it's a question of looking at static efficiency vs dynamic efficiency.

If the double dipping was not allowed, I would venture to guess that people would just continue working their job and not retiring to take their pension.  However, when double dipping is allowed people then choose to "retire," take their pension and then get rehired.  In this case, you are worse off as a taxpayer with allowing the double dipping than if double dipping was not allowed.

[Murse]

Regarding my double dipping comment, no I dont have an issue with someone retiring and then working elsewhere while collecting their pension. The issue is when someone retires and gets their pension and then gets rehired at basically the same role in the same place. It was rampant in my area for a while and still might be. It was widely understood to be gaming the system and got a lot of press coverage. The system should be reformed and in many places it has been. Since pensions are "for life" they shouldn't be started until you are truly done working at that job. Starting them as early as many do exacerbates the deficits that so many people complain about and provide unjust enrichment to those double dipping. If you're still doing the job you aren't retired and shouldn't be collecting that pension. There are many other problems with double dipping but that's the primary one. Here is one of many many articles about the practice.

https://www.google.com/amp/www.nj.com/articles/16904736/double-dipping_make_suckers_out_of_taxpayers_edito.amp

What I'm still not understanding is how these practices are hurting me as a taxpayer. As I understand it, the government is paying out a pension either way, and it is hiring a person to do a job either way. This seems to be a legal way for some individuals to enrich themselves.  Unless there's a cost, I don't see what is worth getting upset about.

The real issue seems to be the life-time nature of pensions. Given that we've decided pensions should never 'run out' (particularly at the end of one's life) we have this problem of vastly unequal lifetime distributions. If someone works a job for 25 years and retires in their 40s, s/he could collect benefits for 50 years, or twice the length of his/her working career. Another could work the same amount at the same job but start at age 42 and retire at 67. That person might only get a decade of benefits (or much less). Vastly different lifetime compensation for the same amount of work.

Many pensions try to remedy this by requiring the individual to be a certain age (e.g. 55 years old) before taking a pension. But that doesn't preclude the individual from working a second job, and it seems enormously unfair to the individual to tell him/her "you can't work because you already have a pension".  Under such circumstances what's the proper thing to do?  Prohibit them from working? Prevent them from retiring? Obviously both are absurd suggestions.

To me, the problem is with offering lifetime pensions at all. FWIW this was a core rational behind IRAs and 401(k) plans when they were proposed.

As a one-off, you're not worse off as a taxpayer.  However, the problem is how people change their behavior when the situation is not a one-off.  In economics, it's a question of looking at static efficiency vs dynamic efficiency.

If the double dipping was not allowed, I would venture to guess that people would just continue working their job and not retiring to take their pension.  However, when double dipping is allowed people then choose to "retire," take their pension and then get rehired.  In this case, you are worse off as a taxpayer with allowing the double dipping than if double dipping was not allowed.

I disagree. I think people would still take their pension and just get a different job. Unless you are arguing raising the pension withdrawal range, but again going back to total compensation you would have to raise wages. My co-workers and I can retire (collect our pension) at 53 (if we have 25 years in.) if that age were to change to 65 then you can bet I would expect to be compensated for that change (by moving closer to market rates due to a benefit cut.) Again, when you look at total compensation for similar employees (education, experience ect..) studies suggest we are compensated 97% of what our private sector counterparts are. If you cut the pension benefits I imaging it would drop to around 90%ish... meaning you would have to make it up elsewhere....

Again, anecdotally I have been offered 15% more pay with benefit cuts for private sector work. A branch of my union negotiated an 8% raise to get closer to market for their nurses. Our nurses did not get that raise.

Then people complain about how much OT public workers get... I don’t understand... of course there is a ton of OT, nobody wants to do the job for the current compensation package. Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)

Side topic- I think it’s funny that we are all on a site trying to take advantage of everything we can to benefit us the most to retire early (tax avoidance, student loan forgiveness, even millionaires using the aca subsidies) but people want to come complain about union pensions?

I would also like to say for the record that I would be in favor of a cap on annual pension benefits of less than 4x the median income (pick a number I don’t care.) or not I don’t know. We already have a tough time keep physicians causing physicians OT (or contractors being hired at massive rates.) I don’t understand what fiscal conservatives want done to rectify the issues they see.

Honestly unions do some harm, I agree. However they are a net good for the people they serve (in my opinion.)

[maizefolk]

Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)

Yup, that's one of the arguments against trying to pay less for workers today for generous pensions in the future. Most workers value future pension benefits less than current compensation. So you might have to offer pension benefits with a net present value of $2-3 dollars for every dollar of reduced salary they'll agree to.

If you're a politician trying to reduce spending now who doesn't care what spending looks like after you're dead and buried (or at least out of office), trading $2-3 in net present value for $1 today may seem like a good deal. But as a society, we could probably get the same people to agree do the same work for a lower lifetime cost with front-loaded benefits rather than back-loaded benefits.

[Murse]

Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)

Yup, that's one of the arguments against trying to pay less for workers today for generous pensions in the future. Most workers value future pension benefits less than current compensation. So you might have to offer pension benefits with a net present value of $2-3 dollars for every dollar of reduced salary they'll agree to.

If you're a politician trying to reduce spending now who doesn't care what spending looks like after you're dead and buried (or at least out of office), trading $2-3 in net present value for $1 today may seem like a good deal. But as a society, we could probably get the same people to agree do the same work for a lower lifetime cost with front-loaded benefits rather than back-loaded benefits.

I hear ya but I think pensions in general provide a needed service. People are very bad at delayed gratification, a pension program forces it upon them. I would be in favor of doing away with all pensions if the gov required all citizens contribute 10-15% of their gross salary to a 401k type account with a required match by employers. I would even be okay with this replacing the current SS program. But then if we want to make everything apples to apples we would have to tackle health care as well, so while we are overhauling pension laws let’s throw in universal healthcare so that everyone has similar healthcare coverage. Now That we have made sure everyone has the same or similar benefits, we can let the free market manage hourly rates.


Except for people opposed to pensions will never go for the above because they tend to be conservatives, and any kind of required contribution or welfare (universal healthcare) is big government trying to get more control.

So since I can’t wave a magic wand I guess here is what I will say. The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently. I guess I am glad we live in a world where my decisions are not the end all be all. We have a political system (and judicial) to sort this stuff out.

[maizefolk]

Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.

The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.

I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.

Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.

[fuzzy math]

A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.


I am a future pension recipient, although with my projected work years (~8) I will collect between $6 - 14k a year depending on my speed to FIRE, final projected salary and pension draw start. My rubric is 1% x yrs service x top 3 yrs average salary. I do not get OT. I do contribute to SS. I contribute 1% of my salary for the first 50k, then 2% of the amount over. The older pension plan at my work gives 2.2% x yrs x 3 yrs salary. I calculated what that would mean for my coworkers who are under the plan and how their incentive to never retire is so much higher than mine (UGH PLEASE RETIRE ALREADY). I do receive a private matching to my retirement account that they don't but overall I feel my plan is adequate since I am comfortable managing my own accounts.


More anecdotes about people "double dipping" from their pension. In the medical field, its very easy to be a locums / traveller. Lots of people retire from their employer, draw their pension early, and then go work for a locums group doing the same exact job. These locums groups tend to pay much higher for fields like nursing than being a regular employee and since there is such a nursing shortage of course the RN can get their same job back again. It just further compounds the nursing shortage and strange stranglehold that locums agencies hold in the industry.

[NoStacheOhio]

A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.

It seems like porting over the "highly-compensated employee" rules from 401(k)s might be useful. If you cap pension contributions, then you won't end up with monthly payouts higher than the annual median household income. Beyond that, workers are free to use their money any way they like (403b, 457, 401k, taxable, hookers and blow, whatever).

[fuzzy math]

A few thoughts - this is one of the few threads where I find myself simultaneously agreeing with the most liberal AND conservative forum posters here. I think the sense of disgust I feel is one that we all share - a wish that things had never been designed like this. As a former resident of OR who paid roughly $4k in state taxes the past 2 years, its pretty depressing to know that my entire year's contribution covers 1.57 days of a single $76k a month pension. Compensation while working is negotiated and earned (employment contracts shouldn't be messed with) but in situations like this it has reached a point of absurdity. My brain struggles to believe that anyone really provides $1.9MM a year in justly earned salary. And once you are no longer working, its hard to argue that your value to the community should continue to same extent as a retiree. Personal contributions do inflate one's pension value, and I do not wish to discount that. However even if the pensioner had provided 25% of their final pension fund value (unlikely given OR's bogus math), its hard to justify the other $1.4MM as necessary or even reasonable in the context of public spending.

It seems like porting over the "highly-compensated employee" rules from 401(k)s might be useful. If you cap pension contributions, then you won't end up with monthly payouts higher than the annual median household income. Beyond that, workers are free to use their money any way they like (403b, 457, 401k, taxable, hookers and blow, whatever).

NoStache for pres! (esp the part about hookers and blow - another great way to limit the amount of time pensioners draw))

[Murse]

Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.

The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.

I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.

Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.

I agree with you on the bolded, I was not specific enough. The voters of Oregon are okay with the status quo of Oregon. Other wise they would vote in someone different, perhaps from another party? Just because a lawsuit was brought does not mean that the vast majority of voters are unhappy with the status quo.

This is probably true of all states, Republicans love there state governments slashing budgets otherwise they would not keep voting in republican that slash budgets.

I agree that most people are unhappy with the status quo at the federal level. Maybe my bias is showing being from a blue state but the polls tend to agree with me.

[alanB]

My favorite quote from the article:

But efforts to change the system, including a 1994 ballot initiative, were blocked by the State Supreme Court, which ruled that accruals could not be reduced during any public worker’s career.

So, when lawmakers required government retirees to pay Oregon’s 9 percent income tax, as everybody else did, they also increased pensions by 9.89 percent, giving retirees extra money to pay the tax with.

“It’s an affront to everybody who pays taxes,” said Bruce Dennis, a retired carpenter from outside Portland who earned a $54,000-a-year pension by swinging a hammer for 45 years. No one gives him extra money to cover his taxes.

109.89% x 91% = 99.9999%, I'm surprised they didn't fight for that 0.0001%

[fuzzy math]

Well if it was a government program required of all workers you'd avoid the issue of pension benefits being valued less than present salary by public sector employees, and a lot less than the net present value of providing those benefits by politicians, so I think such a system would be reasonable. But as you say, the likelihood anything like that ever gets implemented .... yeah.

The elected officials are temporary and the voters obviously like the status quo. If they didn’t they would elect other officials who would handle things differently.

I would say that the bolded bit does not reflect my observation of the preferences for feelings of voters I've interacted with in a number of states.

Also in the specific case of Oregon, the voters clearly don't like the status quo because they keep trying to change it and are being told by the courts that they are bound by agreements entered into by dead politicians before many members of the current electorate were born.

I agree with you on the bolded, I was not specific enough. The voters of Oregon are okay with the status quo of Oregon. Other wise they would vote in someone different, perhaps from another party? Just because a lawsuit was brought does not mean that the vast majority of voters are unhappy with the status quo.

This is probably true of all states, Republicans love there state governments slashing budgets otherwise they would not keep voting in republican that slash budgets.

I agree that most people are unhappy with the status quo at the federal level. Maybe my bias is showing being from a blue state but the polls tend to agree with me.

I wouldn't vote in a politician who espoused views I disagree with 98% of the time simply over a disagreement about pensions. That does not mean that I de-facto agree with every decision made by the ruling party in OR.
The unfortunate choice with our 2 party political system is that we all have to vote that way, but it shouldn't limit complaining / campaigning for change to the opposite party only.

[Sorinth]

I'm not sure I follow what you mean here. The private sector doesn't have the same problem because in that case the principal's are stockholders, who have found more effective ways to align the interests of their agents (CEOs and managers) with their own interests as shareholders, such as tying compensation to share price, or granting lots of options to executives which are only valuable if the company's own value continues to increase. And efficient stock markets do a much better job of penalizing companies for taking on long term unfunded liabilities to pay above market wages than voters manage with elected officials as well as penalizing companies that aren't willing to pay market rate waged to secure employees with the necessary skill sets to sustain the business.

Now that system does break down sometimes, for example in determining the pay of CEOs themselves. And as a society we spend a lot more incentive pay and stock options for CEOs than we do on salaries for elected officials, so the systems for aligning the interests of the management negotiating private sector pay with the interests of shareholders who don't want to pay employees more than market rate doesn't come cheaply. And I'm not arguing that the free market solution adopted in the private sector would work for the types of things we need government (and government employees) to do. But I don't think it is accurate to say this particular problem is equally prevalent in the private and public sectors.

The point is that those companies are using their political clout to benefit themselves, same as public sector unions. The only difference is the benefits go to the workers instead of the shareholders. Personally that's the same to me. A select few benefit from their political clout at the expense of the taxpayer.

[facepalm]

How many police departments do you know of are hiring 18yo's and are paying $200k in retirement?

Mine certainly wasn't.

My county sheriff's department retirement #'s in 2013:
# of retirees in the county with >$200k a year in pension: 4
# of retirees in the county with $100-$200k in pension: 6

I typed "police" and the first page, the lowest # on the page for the state is $600k
By page 3, you're all the way down to $449k. Yikes.

Finding my own city was trickier because of how they do the entries.  Listed not by their department, but google and all that.
A short 10 minutes and on the first page only, about 5 retired police employees at $175k and two fire employees at $160-$175k. 
Average years of service just under 30 years.

Wow,  is this in a big city? What would their annual salaries have been? 

Those examples are getting twice the pension that Paul Ryan will qualify for in a couple years. (Of course, I have little doubt they also worked far more days in their careers than Ryan).

This is California, and the tricky part is many of the pensions are based solely on their highest annual salary, or highest two.  So it's not uncommon to throw a lot of overtime at someone in their last year to "boost" their pension, so to speak.  It's in fact very common.

Transparent California is the website.

As I said up above, the typical years of service for these retirees is 27-29 years.  It's listed on the website, along with the year they retired.

So yes, there are people who have been pensioners for a couple of decades, who are being paid in part by taxes of people who weren't born when the deals were made.

I guess when the city defaults and goes bankrupt, it'll work itself out.

CALPERS has made several changes over the years to eliminate pension spiking. From what I can tell, you can no longer have a bunch of overtime thrown at you your final year and see your retirement benefit go up by any appreciable amount. In fact, overtime pay or off scale pay is seemingly disallowed--retirement benefits are calculated off the pay scale. Of course, before the reforms it was entirely possible to have your income as a firefighter or police officer boosted by overtime. Managers and department heads make far more, of course, so they will see correspondingly higher salaries.

Sadly, the information contained in Covered California is often inaccurate. I checked my own record (I'm a CA employee) and it is way off.

[maizefolk]

I'm not sure I follow what you mean here. The private sector doesn't have the same problem because in that case the principal's are stockholders, who have found more effective ways to align the interests of their agents (CEOs and managers) with their own interests as shareholders, such as tying compensation to share price, or granting lots of options to executives which are only valuable if the company's own value continues to increase. And efficient stock markets do a much better job of penalizing companies for taking on long term unfunded liabilities to pay above market wages than voters manage with elected officials as well as penalizing companies that aren't willing to pay market rate waged to secure employees with the necessary skill sets to sustain the business.

Now that system does break down sometimes, for example in determining the pay of CEOs themselves. And as a society we spend a lot more incentive pay and stock options for CEOs than we do on salaries for elected officials, so the systems for aligning the interests of the management negotiating private sector pay with the interests of shareholders who don't want to pay employees more than market rate doesn't come cheaply. And I'm not arguing that the free market solution adopted in the private sector would work for the types of things we need government (and government employees) to do. But I don't think it is accurate to say this particular problem is equally prevalent in the private and public sectors.

The point is that those companies are using their political clout to benefit themselves, same as public sector unions. The only difference is the benefits go to the workers instead of the shareholders. Personally that's the same to me. A select few benefit from their political clout at the expense of the taxpayer.

Gotcha. Yes, making decisions in negotiating compensation with public sector workers which are not in the best interest of the tax payers is certainly not the only example of elected officials making decisions because their own best interest is not always aligned with the best interests of the people who elected them.

[GU]

I disagree. I think people would still take their pension and just get a different job. Unless you are arguing raising the pension withdrawal range, but again going back to total compensation you would have to raise wages. My co-workers and I can retire (collect our pension) at 53 (if we have 25 years in.) if that age were to change to 65 then you can bet I would expect to be compensated for that change (by moving closer to market rates due to a benefit cut.) Again, when you look at total compensation for similar employees (education, experience ect..) studies suggest we are compensated 97% of what our private sector counterparts are. If you cut the pension benefits I imaging it would drop to around 90%ish... meaning you would have to make it up elsewhere....

Again, anecdotally I have been offered 15% more pay with benefit cuts for private sector work. A branch of my union negotiated an 8% raise to get closer to market for their nurses. Our nurses did not get that raise.

Then people complain about how much OT public workers get... I don’t understand... of course there is a ton of OT, nobody wants to do the job for the current compensation package. Most nurses I know would rather have the 15% increased pay (and 12 hour shifts) instead of the increase benefits (including the deferred compensation.)

Side topic- I think it’s funny that we are all on a site trying to take advantage of everything we can to benefit us the most to retire early (tax avoidance, student loan forgiveness, even millionaires using the aca subsidies) but people want to come complain about union pensions?

I would also like to say for the record that I would be in favor of a cap on annual pension benefits of less than 4x the median income (pick a number I don’t care.) or not I don’t know. We already have a tough time keep physicians causing physicians OT (or contractors being hired at massive rates.) I don’t understand what fiscal conservatives want done to rectify the issues they see.

Honestly unions do some harm, I agree. However they are a net good for the people they serve (in my opinion.)

Responding the bolded points:

1. Re: "you'd have to give me a raise if you raised the pension age"  No, I don't think we would have to raise wages for about 90% of the state and local government workforce. Where would they go work? What other job is going to give them so many days off, let them obtain quasi-tenure/untouchable status, not judge performance based on value added to the enterprise, give uber-subsidized health insurance, let alone absurdly generous pensions and retiree healthcare benefits? It's still an *outstanding* deal for most of the folks employed by the govt.

Most of the people in state/local government would not be able to find a comparable paying job. I'm not even talking about police/fire, I mean the legion of office and white collar workers who get paid way more than their worth in the private sector. Yes, there is a sliver of people in state/local government that are actually skilled, not lazy, and marketable. We should pay those people more than they get paid now. But we should pay the rest less, many of them significantly less.

It would be immensely helpful to fiscal health of the states/localities if there was a "no early pensions" (pre-65 let's say) rule enacted. I would be happy to give all of the hard-charging, ambitious go-getters who would leave if the pension age was raised their entire personal contributions to their pensions in a lump sum in exchange for leaving their government position for greener pastures. The main problem would be that only about 5% - 15% would actually leave, because like I said, the vast majority have it way better in government than they would outside of it, even with harsher pension rules.

2. Re: OT, are you naive? No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.

3. Re: non-govt. MMM'ers taking advantage of things, I agree, I've personally criticized all of those behaviors on this forum. But the scale and ubiquity of public sector pensions vastly overshadows any shenanigans caused by the tax avoiding misers of MMM. Many state and local government budgets are dedicating the plurality, or even majority, of spending towards employee pensions and retiree healthcare. That is, current year spending is primarily tied up in paying for services rendered long ago. This is crowding out legitimate government functions [https://siepr.stanford.edu/sites/default/files/publications/17-023_1.pdf], as well as foisting unnecessarily high taxes onto the public, most of whom never would have signed off on these pensions had they been asked about it.

* * *

I know that you're not personally to blame for any of these problems. And I'm sure you're one of the people who actually has comparable employment options outside of the public sector. I don't really want to take away promised benefits from people, at least not people who are close to their promised retirement date (but I'd switch new and newer employees to a 401(k) and SS, just like the rest of us schlubs). What is galling is when people try to defend the indefensible. When a state like Illinois has 7,500 teachers drawing +$100k pensions [https://www.forbes.com/sites/adamandrzejewski/2016/04/22/mapping-the-100000-illinois-teacher-pensions-costing-taxpayers-nearly-1-0-billion/#6df3b970237e]—when the median *household* income is $59,000 [https://www.census.gov/quickfacts/IL]—that is simply indefensible, especially when you consider the horrid fiscal condition of the state.

[maizefolk]

2. Re: OT, are you naive? No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.

The two bold bits are a bit contradictory. In both the public and private sectors, whether it's more cost effective to pay overtime or hire more staff depends on the fixed costs of recruiting, training, and maintaining new employees. Even in the private sector health insurance benefits costs enough at this point that depending on the circumstances it can be cheaper to shell out for some overtime pay than to grow the size of your workforce.

In government work, it may also be that there are fixed pay bands for a position which are not enough to attract applicants, and management is not permitted to raise regular compensation, but is allowed to pay overtime, so overtime becomes a backdoor way of circumventing legislative barriers to paying a market rate salary. As more positions are filled the amount of available overtime decreases, making remaining unfilled positions less and less attractive. As more positions become vacant the amount of overtime increases, making the unfilled positions more and more lucrative and hence easier to fill, until total income including overtime pay stabilizes as something approximately like market rate compensation. 

Aside from that you're making some very strong statements in the absence of data. Yet, you're turning around and demanding people show their sources before they can disagree with you. For example:

Most of the people in state/local government would not be able to find a comparable paying job. I'm not even talking about police/fire, I mean the legion of office and white collar workers who get paid way more than their worth in the private sector.

Do you have source for the bolded statement above? There certainly are large numbers of individual cases of people being overpaid in state and local government relative to what they could earn on the open market. There are also systematic cases, like the Oregon pension system which was promising people returns well above market rates.

However, I'm specifically interested a source to back up the use of term "most" which implies that the number is at least 50% + 1 of all state and local employees.

[GU]

Responding to Maizeman

1. My understanding is that most OT is worked by police, fire, and prison guards. At least for the first two, there are normally far more qualified applicants than advertised positions. I'm willing to be proven wrong, please provide links.

2. Look at the CBO study I cited earlier in this thread. I would also invite you to spend time at a state or local government building some time and observe who works there. The median employee seems to be a dowdy slob who takes a smoke break every hour. Who is going to offer these people above-average compensation in the private sector?

[maizefolk]

For #1, you've made two states of fact: A) most overtime is worked by firefighters and police officers and B) there are normally far more qualified applicants than advertised positions for both of those jobs.

The first would be easy to provide some data to back up, just dig up a study that shows what percent of overtime hours worked by public employees are worked by police and firefighters. The second is a bit harder because "qualified" is a bit hard to qualify, and the definitions of "far more" and "normally" are also subject to debate. But we could start with a study showing the average number of applicants per government position, and go from there.

You've also dropped the thread regarding the point that paying more overtime can be an economically rational decision if you fixed per-employee costs (things like training and healthcare) are high. Can I take the lack of comment an indication we are in agreement on this point?

For point #2, it's helpful to start with this quote from the CBO study you linked to:

Even among workers with similar observable characteristics, however, employees of the federal government and in the private sector may differ in other traits, such as motivation or effort, that are not easy to measure but that can matter a great deal for individuals’ compensation. Moreover, substantial ranges of compensation exist in both the federal government and the private sector among workers who have similar observable attributes. Therefore, even within groups of workers who have such similarities, the average differences in compensation between federal and private-sector employees do not indicate whether particular federal employees would receive more or less compensation performing a similar job in the private sector.

There is also a lot of great data in here about other differences between the federal workforce and the private sector. The workers tend to be a bit older (average age 46 vs 42), and 36% of federal employees work in fields like science and engineering vs only 20% of the non-federal workforce. Likely as a result of that 28% of federal workers have a masters, MD/JD, or PhD vs 11% of nonfederal workers.

Overall the CBO analysis was a fun read, and there's also a section in there about the problem I was talking about before of whether workers value an increase retirement benefits as much as an increase in current salary, even if the cost of providing the two is the same (they almost certainly don't), and I apologize for not reading it when you first posted it. However, I didn't find anything in the study about whether or not the majority of government workers would be able to find jobs with equivalent compensation if they left their current employer or not.

I'm not sure what the apparent attractiveness of state employees has to do with the point we're discussing. For obvious reasons I wasn't able to find any numbers on what percent of government employees would be considered dowdy. I was able to find this reference in a new paper column which indicates that in 2013 only 10% of wisconsin state employees would be effected by a new health insurance surcharge on smokers,* which in turn suggests that at least 90% of state employees (in that particular state) are not taking a smoke break every hour.

*Source: http://host.madison.com/wsj/news/local/health_med_fit/health-sense/health-sense-plan-to-charge-state-workers-who-smoke-isn/article_af18b548-8fd0-11e2-a0ac-001a4bcf887a.html

[Adam Zapple]

Responding to Maizeman

1. My understanding is that most OT is worked by police, fire, and prison guards. At least for the first two, there are normally far more qualified applicants than advertised positions. I'm willing to be proven wrong, please provide links.

2. Look at the CBO study I cited earlier in this thread. I would also invite you to spend time at a state or local government building some time and observe who works there. The median employee seems to be a dowdy slob who takes a smoke break every hour. Who is going to offer these people above-average compensation in the private sector?

I am always surprised by the friendliness and professionalism of the employees at my local city hall.  Everyone seems to enjoy their jobs and are always willing to help me with whatever issue it is that I am there for.  I'm seriously impressed with the hiring managers there because the people are excellent.  None of them seem like smokers but I didn't sniff their fingers to confirm.

[Kyle Schuant]

my god, this is obscene:

Maybe he needs it to take care of a former spouse?

"I paid off my wife’s student loans — then she filed for divorce after two years of marriage"

[MMMdude]

I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.

The obscene part is that the cities and states negotiate these deals and then don't ensure that they reserves appropriate funds to pay the pensions when their time comes due.

This.  I am a member of a public pension and it is managed by a 3rd party, not by my employer.  My employer has to pay a certain percentage into it every year, along with the percentage I have to put in.  My employer has to put in 1% more than I put in.  The amount that I and my employer contribute is reviewed annually by the fund to ensure that everything is on target for my eventual retirement, as well as ensuring the health of the plan for current retirees.  The contribution rate actually went down by 1% for 2018 due to the recent years market run up.  It could easily go up a couple of % points next year.  My total compensation package is still less than what my job goes for in the private sector (I am trading off work life balance for higher compensation, I am not complaining about this), so any arguments about public sector workers being over compensated, at least for those in the professions, is simply not correct.  My eventual pension payout looks like it pretty much follows the 4% rule.   

When I hear about municipal pensions being cut after the fact to employees like police and firemen, it makes my blood boil.  The blame is squarely on the shoulders of the municipalities, not on the workers, but oh how easy it is to vilify the workers for their "gold plated pensions" sucking away resources to school children. 

It isn't ok for the private sector to withhold compensation because a corporation would rather spend the money on new infrastructure, it  shouldn't be ok for the public sector to do the same thing. 

Perhaps something like Sarbanes–Oxley needs to be expanded to incorporate municipal and state financial accounting.

LAPP plan?  Based on your location and description sounds like it.  I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less.  But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars.  Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.

[clarkfan1979]

I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.

I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.

If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.

These are extreme examples. Let's talk about more typical examples.

I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.

In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.

If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?

 

[fuzzy math]

I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.

I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.

If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.

These are extreme examples. Let's talk about more typical examples.

I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.

In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.

If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?

1) cost of living. Florida is one of the cheapest places in the country, and DC one of the most expensive. Pay at both institutions reflects that

2) your first job you had 0 yrs experience as a Ph.D. Your 2nd job you had 4 yrs. In the first situation you were probably not a very competitive candidate (with no experience) and therefore they could hire you for sub market wages. In the 2nd example you were very desirable with 4 yrs in the field and your offer also reflected that. You failed to compare your salaries based off what the Dc job would have paid in 2011.

3) market recovery. In 2011 many state budgets were strapped. In 2015, the market was up and private firms had more $$ with which to work.

[chasesfish]

Long thread!

My only comment is its amazing that some cities/counties/states still haven't figured out they need to cap earnings eligible for pension.

I get a private sector pension, but the income that's eligible is capped so the people at the top and 1-2 rungs below the top aren't getting any more accruals than some field managers.   We are in an industry that doesn't give pensions, but leadership feels its really important for the $40k employees, so I hope they move that cap way down to accomplish leadership's goal but get more competitive on cash compensation.

[FIRE Artist]

LAPP plan?  Based on your location and description sounds like it.  I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less.  But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars.  Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.

I assume that your current employer is also doing some kind of RRSP match, don’t forget to include that in your assessment. The way healthcare benefits are paid may be different as well, and things like disability insurance was covered by my previous employer but now it is mandatory out of pocket for me. My total comp delta is much higher than what you are describing, but as I mentioned, personal time was as important to me as money in my decision making.  And by the way, every second Friday off in lieu for working longer hours was not unheard of in the Alberta oil patch for many of the big corps, so ask yourself why your standards for public sector workers are different.  If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw. 

[the_fixer]

Taxpayers don't have to pay for the shortfalls of private pension schemes offered by companies. That's a monumental difference. Cmon now, you're smart enough to understand that.

 You sure about that? It seems to me that the government has had to step in and bail out companies many times.

Airlines
GM?


Pension benefit guarantee corporation?


Sent from my Pixel 2 XL using Tapatalk

[fuzzy math]

If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.

The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.

Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.

[MMMdude]

LAPP plan?  Based on your location and description sounds like it.  I might have an opportunity to take a job with LAPP pension but would pay $7000 less per annum in addition to loss of approx $10K bonus per year....so I guess $17000 less.  But then i would get the 13% lapp match from employer....i'm just struggling to quantify if that makes up for the shortfall in compensation in today's dollars.  Oh yea also the hours of work and "time in lieu" for working an extra half hour per day are absolutely absurd and as a taxpayer make me abit livid to be honest.

I assume that your current employer is also doing some kind of RRSP match, don’t forget to include that in your assessment. The way healthcare benefits are paid may be different as well, and things like disability insurance was covered by my previous employer but now it is mandatory out of pocket for me. My total comp delta is much higher than what you are describing, but as I mentioned, personal time was as important to me as money in my decision making.  And by the way, every second Friday off in lieu for working longer hours was not unheard of in the Alberta oil patch for many of the big corps, so ask yourself why your standards for public sector workers are different.  If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.

Yes there is a 9% rrsp match....basically all in I would be at 156k at current employer whereas potential is 129k + 13%lapp = 146k.  Of course the bonus at my work can be less than 10k some years.  I guess the question i have to figure out is what is the future value of that DB plan once i start collecting at 65 or get it early at 55.  Even contributing for 10 years works out to about 25k per year at age 65.  It would be wonderful to offset some of the market risk those of us without DB plans have.  Those hoping to retire in the next five years are due for a rude awakening given the inevitable market correction coming....public sector employees have not a care in the world about it.  My buddy has LAPP plan and hasn't saved a dime and told me why would I when the government is taking care of my retirement...

[Sorinth]

No rational business would have chronic OT claims as a permanent feature. It would simply hire more people. Rolling OT implies you need more employees, and that you could staff things cheaper by hiring more people. Government doesn't do that because: (a) current workers *want* to work the OT, and the cost is paid by someone else (taxpayers), so who cares; (b) there's a gigantic fixed cost to hiring any employee because of pensions and retiree healthcare costs; (c) politicians like when it's hard to get hired because then they can dole out positions in quid pro quo or clout exchanges. You're going to have to cite statistics showing me that they have trouble filling government jobs, that applications are low, etc before I believe that all the OT payouts are because, well shucks, no one will sign up for the job! Preferably not an AFSCME publication.

Huh? OT is pretty much constant at the company I work for, and it's been like that since well before I started over a decade ago. They in fact have a reputation of burning people out due to the overtime/travel. It's most definitely a permanent feature.

[DreamFIRE]

If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.

The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.

My federal tax burden is pretty high.  Being single, no kids, and having a six figure income, I pay far more than a four person household with the same household income, plus my income wasn't paid to me from collected tax dollars.  Most people I know who complain about government waste (including overly generous pensions) pay significant taxes as well, despite the Trump tax cuts which cuts some of the burden.  However, even those in low income households votes count just as much (assuming they are legal citizens.)

Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.

Those who want to cut government waste typically recognize that that doesn't mean eliminating all of government.  There are extremists on both sides, but that's not the norm.

[DreamFIRE]

Taxpayers don't have to pay for the shortfalls of private pension schemes offered by companies. That's a monumental difference. Cmon now, you're smart enough to understand that.

 You sure about that? It seems to me that the government has had to step in and bail out companies many times.

Airlines
GM?

Didn't Obama tell us that GM paid back every last dime borrowed from the government?

[clarkfan1979]

I don't see anything obscene about it. A highly compensated person who's skills were in demand was given a compensation package that included delayed compensation in the form of a pension that was a fraction of his market value. Seems fairly normal and acceptable to me.

I don't have a problem with the pension either. The reason the pension is so high is because the salary was so high. The article is talking about a University President and a University Football Coach. Both positions probably pay 3 million/year.

If the football coach was in the NFL he would probably make 5 million, but have no pension. That is what Chip Kelly did, who was the last football coach of University of Oregon.

These are extreme examples. Let's talk about more typical examples.

I got my first full-time faculty job at a large state University in Florida. With a Ph.D., my starting salary in 2011 was 40K with a 10.42% contribution toward my 401K. During the recession, it was determined that the state workers retirement benefits were too high so they cut the employer contribution to 5.12%.

In 2015 a head hunter called me for a job that I was offered in the past. It was for a research position for a non-profit in D.C. I originally turned the offer down because the salary was too low for D.C. She called me to tell me they raised the starting salary to about 120K and wanted to know if I wanted to interview again.

If my value is 300% more in the non-profit sector it's probably 400% more in the corporate sector. Why are they taking my benefits away claiming that I'm over compensated?

1) cost of living. Florida is one of the cheapest places in the country, and DC one of the most expensive. Pay at both institutions reflects that

2) your first job you had 0 yrs experience as a Ph.D. Your 2nd job you had 4 yrs. In the first situation you were probably not a very competitive candidate (with no experience) and therefore they could hire you for sub market wages. In the 2nd example you were very desirable with 4 yrs in the field and your offer also reflected that. You failed to compare your salaries based off what the Dc job would have paid in 2011.

3) market recovery. In 2011 many state budgets were strapped. In 2015, the market was up and private firms had more $$ with which to work.

I agree with your points

1) Yes, Florida was cheaper and that's why I said "no" to the original offer of $67,500 for D.C.

2) The D.C. job posting was Masters Degree and four years experience minimum, but Ph.D. preferred. I was finishing up a Ph.D. and I had 7 years experience doing applied experiments in the field across my MA and Ph.D.  I technically didn't have a Ph.D. yet when I was offered the job. I asked if I could get a guaranteed raise after getting my Ph.D. in about 4-6 months and they said no.

The non-profit had plenty of money in 2011. You should have seen the building they leased. It's crazy expensive. They didn't budget enough for the position. After 4 years of struggling to hire someone they re-budgeted and they called me back. New minimum salary was 105K, but with a Ph.D. and now 11 years experience, more like 120K.

My salary at the state school in Florida after 4 years went from 40K to 42.6K. After getting my benefits cut by over 5%, my overall compensation was basically flat over 4 years. Because that school is really bad about raises they have a problem with salary inversion. New hires out of grad school are sometimes getting higher salaries than people who have been there for 5 years. I left after 4 years.

[maizefolk]

Universities are generally terrible at recognizing and responding to the fact that the market wage their employees could command continues to change over time after they are hired.

Essentially you need to have another job offer in hand, with a higher salary attached, and be absolutely willing to leave for that other position in order to have any shot at a significant raise. At which point you might as well leave.

[nereo]

If you take this new job, brace yourself for the BS coming from the “taxpayers” around you, who feel justified in chiming in on your employment contract. Public sector workers are tax payers too btw.

The best part being that a lot of the people complaining have 0 federal tax burden, and many utilize those same gub'mint services they rail against.

Aslo like republican lawmakers who rail against government workers, while either failing to acknowledge (or hope others don't) that they themselves are the govt.

I notice three common 'themes' among the crowd who rails against government workers.  I say 'themes' instead of 'assumptions' because to them these are indisputable facts, backed up by a few cherry-picked examples and their own beliefs

1) government workers are overly compensated, largely because of their benefit packages (see this thread)

2) They are lazy individuals who cannot be fired and this kind of output would never be tolerated in 'the free marketplace'.

3) There is no competition from the private sector, so free market forces are not at work.

If you believe all, some, or potentially even one of these it's easy to assume that the private sector could do the same jobs faster and cheaper.  It also doesn't take long to find specific examples where some of these themes seem to hold true. At the same time, these may be the exceptions rather than the rule, and one could certainly find similar circumstances in the private sector as well. Some themes, such as #1, place substantial sacrifices on the worker like being tied to the same job for 2+ decades or working an obscene amount of overtime (little work-life balance). Others (like #2) rely on a stereotype that private corporations (particularly large ones) never have unmotivated employees and that ignore both the many hardworking and dedicated federal employees as well as the fact that federal jobs are frequently cut both for performance reasons (within the worker's control) and for funding reasons (external - cuts made due to a political change or reduced revenue). Indeed, here there are a lot of parallels to large corporations. Finally, the idea that there is no competition is directly contradicted by the immediate suggestion that we source more functions of the federal government to the private sector. The 'solution' to this 'problem' is to let private companies bid on doing the same work that a particular federal agency has been tasked to do. Indeed every single government agency already works constantly with private contractors that do a large portion of the work, and federal managers are keenly aware that there's a steady drum-beat of political constituents who want to shrink their funding and outsource their work.