[quote=livinincali][quote=CA renter]
We need to go back to 100% in-house management with NO outside advisors. Anyone found guilty of fraud or corruption, either inside or outside of the institution, should personally lose EVERYTHING and face a very stiff prison sentence.[/quote]
Why don’t we just eliminate the middle man completely and just give employees a defined contribution that they are free to invest how they wish. We immediately eliminate all the problems associated with a defined benefit plan. We get rid of all of the following issues.
1) Tax payer risk
2) Pension spiking
3) Lack of employment mobility
4) Corrupt Fund Managers
5) Double dipping
6) Employee Incentives to game the system.
If an employee wants income security in old age put more towards retirement and buy an annuity when you retire. You know exactly how much income you’ll get and whether or not you can afford to retire on that income.
The primary benefit of a defined benefit plan is to eliminate the employees personal risk in being able to retire comfortable. Everybody here would probably take a risk free guaranteed rate of return of 7-8%. Why should public sector employees be a special class of citizens that gets a guaranteed 7-8% rate or return in a 2% growth economy.[/quote]
Already covered this right here:
[quote=CA renter]…those employees are smart enough to know that a large, well-managed pension fund will be better able to maximize returns while keeping risks low…and that these large pension funds will be better able to weather the periodic storms because they have a much longer horizon.
And taxpayers would bear very little risk if those funds were managed wisely and well by **in-house,** salaried managers who have rules that strictly prohibit outsiders from influencing where these funds are allocated (no corruption).
Always keep in mind that taxpayers bear many risks in this world…from FEMA incidents to wars to tax cuts for the rich, etc., etc. It’s silly to pick just one type of risk and harp on that. Of all the people we should want to bear risk for (and minimal risk at that, if we keep the privatizers out of it), I’d think that the people who do the work that give us a safe, educated society in which to live would be high on the list.[/quote]
Public employers offer these benefits in order to keep their recruiting and training costs down because of the lower employee turnover, and they also attract the best possible candidates for these positions. Contrary to the myths pushed by the Privatization Movement, most government agencies perform very efficiently and have extremely high-quality employees. With the millions of public employees in this country, you’re bound to get a few bad apples, but for the most part, they are very well-trained, responsible, trustworthy employees. And since many of these employees have positions that require high levels of trust and responsibility, it’s incredibly important to hire and retain the best candidates possible.
I’ve worked in both the public and private sectors, and can say for a fact that the employees that I’ve worked with in the public sector were more honest, harder working, and more competent than those I’ve worked with in the private sector. Others I know who’ve also worked for both public and private industry have noted the same thing. These benefits really do help recruit the best available employees.
As for the pension spiking, etc., Governor Brown’s reforms have reduced or eliminated most of the avenues for this type of abuse, thankfully. The fund managers are another thing, but there is a movement to start bringing more of the management back in house, mostly because these private funds and fund managers/advisors are not delivering better results. Keeping my fingers crossed on that one.
