[quote=Dazed and Confused]Thanks to SK for summarizing funding considerations for a DB plan. Pretty amazing that you can do something like that over your phone. I would like to emphasize one of your points where you say that plan sponsors negotiated retirement plan increases in lieu of current compensation increases and the impact on benefit and funding obligations. In 1999, Gray Davis signed SB 400 which effectively doubled the retirement benefit to be paid to state workers, allegedly based on actuarial forecasts predicting that no additional contributions would ever be required because investment returns were going to be so high. This benefit increase applied to past service, a point which cannot be overemphasized in its impact on the funding. The truth of what the actuaries told the politicians is debated, there are certainly several parties with an interest in CYA here, but the bottom line is that benefits were increased substantially with retroactive application.
It is probably a waste of time to talk to a partisan like CAR where he/she has resorted to the favorite union tactic of calling people “haters” in an attempt to devalue their viewpoints. However, I note that the unions have really missed an opportunity to take the higher ground and retain allies among the moderates who are not already committed on the public employee pension issue (there may be 2 or 3 of us left). If the unions had been smart, they would have disavowed abuses like spiking, fraudulent disability pensions, double dipping, and offered to give back the gifted benefits increase from 1999 with respect to at least the retroactive portion (that was a gift because when the work was done under those contracts, the benefits were at the bargained for lower rate). These practices also skew the actuarial funding assumptions.
CAR’s point about what to cut in legitimate in that there will be pain for all. Inevitably. And this even ties in to real estate because taxes are going to go up even if benefits to state employees are reduced, the numbers just are that bad.[/quote]
Dazed and Confused,
I only call people “haters” when they use vitriolic, emotionally-based, ignorant arguments in the debate about public employees and government budgets.
Every pro-union/govt worker poster here has disavowed abuses where govt workers are concerned. Not a single person has come out in defense of these scammers. As a matter of fact, most public union members hate these people even more that you (or any “haters”) do because their abuses make it into the newspapers and make the Joe Sixpacks out there think that the outliers are the norm, and that all govt workers are abusers. That is absolutely not the case. Most govt workers are extremely honest and hard-working.
Many union members did come out against the retroactive pension increases. BTW, it was not even close to a doubling of the pension benefits, even in the most extreme cases, and employees made other concessions in pay and benefits in order to get the pension benefit increases. Like you’ve said, politicians were told that these increases would not cost taxpayers a dime because the pension funds were doing so well. They were foolish to believe it, but that is what they were told.
I personally have advocated for a pension calculation that averages the annual pay *over the entire career* of the employee, much less the last 1-3 years, and would have only allowed the new increases to apply to the years in which these benefits were paid for (this is based on a 3% formula).
If you take the time to read the post where I made recommendations to fix our budget, you’ll see that I made no exception for govt workers when it comes to cutting costs.
Now, what are YOU (and those who are whining about govt pensions) willing to sacrifice in order to get our budget under control? Why should public employees be the only ones to sacrifice? Our shortfalls have much more to do with lower tax revenue than with pension costs. Are people willing to walk the walk, or do they expect others to make sacrifices so that they don’t have to.
You probably missed it because of the silence in the MSM on this issue, but govt unions have been making many concessions over the past few years. They are one of the few entities who have done so. Everybody else needs to step up to the plate, too. The burden cannot be borne by public sector workers, alone.
