Gov Brown Proposes State Worker Pension Changes

[ctr70]

http://www.calculatedriskblog.com/2011/10/california-gov-jerry-brown-proposes.html

This needs to go a lot further. We need to really completely eliminate pensions for Gov workers. They need to create their own retirements with IRA’s and 401k’s just like all us other worker bees in the private sector. Why should the taxpayer have to pay their fat retirement pensions? Why should we bankrupt our cities, states, cut library hours, cut our school funding to bone, cut other programs just to pay a few retirees their ridiculous pensions?

To me this is this is more of a rape & pillage of society than Wall Street. But the Unions will fight it (huge campaign contributors to Jerry Brown) and the people making the rules get fat tax payer paid pensions too, so the hope for change is small.

[UCGal]

21% of private sector employees have defined benefit retirement plans. 1 in 5.
Granted that’s down from the levels in 1988.

It drives me nuts to see broad statements that pensions are only in the public sector workforce.

Rather than trying to ripp the pensions from people who still have them, why not argue that this trend should be reversed in the private sector.

http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1353

[paramount]

[quote=UCGal]
Rather than trying to ripp the pensions from people who still have them, why not argue that this trend should be reversed in the private sector.
[/quote]

Can I ask you a serious question UCGal? Ok, cool…

What world do you live in?

In case you haven’t heard the news in your world, 99%ers are DESPERATE for work. Pensions AIN’T making a come back.

Back to the OP, even those modest proposals won’t pass. The only hope for justice with regard to these outrageous pensions/benefits/salaries is for Cali to go bankrupt – which is the best thing in the long run I do believe.

I heard a public employee union goon on the news asking: Well how will these workers be able to provide for themselves and family when they retire.

In a way that statement is propaganda to give the impression that the Brown proposals are not just window dressing but are real and deep cuts. On the other hand this tool also really is that out of touch.

[paramount]

Let’s be clear about one thing, I don’t think anyone is saying gov’t workers shouldn’t get a fair salary and savings plan; it’s just that right now what they get is unfair to the rest of us who have to actually pay for their benefits.

For the most part, there is no reason gov’t workers shouldn’t receive benefits on par with those of us in the private sector.

They deserve:

A decent salary
A 401k Retirement account with 50% up to 6% match
A standard medical plan like the rest of us get: $20-$30 co-pays, 4k deductible, etc..

No Pensions
No lifetime medical benefits
Sign them up for social security

[EconProf]

Gov. Brown has pretty much done the bidding of state employee unions and has thoroughly earned his reputation of being their lackey…until now. Looking at the details of his proposals, I’m impressed. Retirement at 67 instead of 55? Wow. Employees pay half into the system? Pension depends on last three years of pay, and no spiking with overtime or other gimmicks? Guys, this is a Nixon goes to China moment. Apparently Brown looked at the math and realized that the current system would blow up in his face and scuttle his chance for a second term.

[bearishgurl]

[quote=EconProf]Gov. Brown has pretty much done the bidding of state employee unions and has thoroughly earned his reputation of being their lackey…until now. Looking at the details of his proposals, I’m impressed. Retirement at 67 instead of 55? Wow. Employees pay half into the system? Pension depends on last three years of pay, and no spiking with overtime or other gimmicks? Guys, this is a Nixon goes to China moment. Apparently Brown looked at the math and realized that the current system would blow up in his face and scuttle his chance for a second term.[/quote]

The problem herein is that Gov. Brown (a CALPERS or PERS reciprocal “retiree” himself), has realized that the *new* crop of young CA state/county/city employees (hired after 1994 or so) can’t even qualify for SS until age 73 so therefore “age 67” is now a “young” age to collect a public pension.

It is what it is.

Frankly, public employees in CA who are/were over age 45 at the time have been paying a great deal (don’t know the exact percentage) of their pay into the “system” since March of 2002. I took “deferred retirement” before that under a different system so don’t know the exact percentages of pay withdrawn and am not eligible for the “enhanced benefits” (enacted March of 2002).

I could believe that 50% of the eventual “retirement pay” would be deducted from a current employee’s wage/salary but NOT until age 50 (of an “active” employee).

Do you have any links for us in this regard, EconProf?

edit: I’m glad to hear that an “eligible employee” can no longer “spike” their retirement pay with “purchased” years in which they did not work (i.e. “broken svc”).

[EconProf]

Bearishgirl, all the papers have stories about this today, as it is a big deal.
I get my state and local political news from Chris Reed, KOGO, AM 600, from 6-8 pm weekdays, except Wednesdays (shameless plug). He’s a libertarian lite, and has done much to expose local and state corruption and waste.

[bearishgurl]

http://www.sdcounty.ca.gov/hr/Comp_Ordinance/Chapter_5/5.6_Retirement.pdf

Above is the link that shows the *new* “ordinance” since March 2002 (County of SD).

[Anonymous]

[quote=UCGal]Rather than trying to ripp the pensions from people who still have them, why not argue that this trend should be reversed in the private sector.
[/quote]

One of the frustrating aspects of these pension debates is that many folks simply ignore the simple fact that pensions cost money.

In many cases, these pensions cost millions of dollars per employee.

There seems to be a perception that pension compensation is somehow different from a paycheck or a bonus or some other payout – that the money used to pay pensions does not need to come from an ordinary bank account funded by ordinary money.

Saying that the private sector should also receive pensions just like the public sector is the financial equivalent of saying everyone with a job should automatically get a million dollar bonus when they are 55. A wonderful idea that prompts the obvious question: “But, where does this money come from?”

The money simply doesn’t exist in the private sector and the only way it comes into existence in the public sector is by taking it from the taxpayer.

For those arguing in favor of generous pensions for all, I have some sobering news for you: There is no magic pension fairy that can create wealth out of thin air.

[UCGal]

[quote=pri_dk][quote=UCGal]Rather than trying to ripp the pensions from people who still have them, why not argue that this trend should be reversed in the private sector.
[/quote]

One of the frustrating aspects of these pension debates is that many folks simply ignore the simple fact that pensions cost money.

In many cases, these pensions cost millions of dollars per employee.

There seems to be a perception that pension compensation is somehow different from a paycheck or a bonus or some other payout – that the money used to pay pensions does not need to come from an ordinary bank account funded by ordinary money.

Saying that the private sector should also receive pensions just like the public sector is the financial equivalent of saying everyone with a job should automatically get a million dollar bonus when they are 55. A wonderful idea that prompts the obvious question: “But, where does this money come from?”

The money simply doesn’t exist in the private sector and the only way it comes into existence in the public sector is by taking it from the taxpayer.

For those arguing in favor of generous pensions for all, I have some sobering news for you: There is no magic pension fairy that can create wealth out of thin air.[/quote]

The money used to exist in the private sector it was common and normal for the private sector to offer pensions until a few decades ago. But then again, executive compensation was less than 20 times the average workers salaries up until a few decades ago. Pensions are still the norm for corporate executives. Are system has gotten screwed and distorted.

Just to be clear, I think Gov. Brown’s proposals are good. Get rid of spiking, use base salary only in calculations, etc. Reforming public pensions is a good idea.

The trend to defined contribution plans, from defined benefit plans is about transferring risk. This, in combination with discussions about privatizing social security are all about funnelling peoples retirement income into the risky stock market and generating broker/transaction fees. It’s setting us up for a terrible scenario where seniors are literally starving because of a volitile market concurrant with their retirement.

Just because the trend is away from defined benefit plans doesn’t mean that is a good thing.

[EconProf]

Pri-dk, you are highlighting one of the painful truths that distinguish public sector pensions from the rest of us. Not only do public sector pensions vastly exceed those of private sector workers (if the latter get them at all), but they last for many more years.
If you goggle Life Expectancy Tables, you will discover that a retiree at age 50 will live an average of 28.5 more years; a 67-year old, 15 more years. So the CA public safety worker retiring at 50 will not only get far bigger monthly checks, he will get them for about twice as many years. This is what so angers the private sector taxpayers supporting the government workers.
Of course, many government workers don’t get their retirement benefits till they are 55, or even later. But the system in general is far more generous to them.
And isn’t it kind of silly to have Highway Patrolmen and prison guards retire at the robust age of 50? Many, perhaps most, go on to other jobs for a decade or two, pulling down two incomes, sometimes even double-dipping by earning another government pension.
This generosity did not exist a couple of decades ago, before public sector unions became politically powerful and muscled their way to such affluence. You can’t blame them–they are doing what they can for their members–that’s what unions do. We can blame the weak-kneed politicians for caving and for thinking short term instead of long-term. And we can blame ourselves, the voters, for allowing it to happen. We are paying the price now and will continue to do so until some kind of roll-back is implemented.

[bearishgurl]

[quote=EconProf] . . . This generosity did not exist a couple of decades ago, before public sector unions became politically powerful and muscled their way to such affluence. You can’t blame them–they are doing what they can for their members–that’s what unions do. We can blame the weak-kneed politicians for caving and for thinking short term instead of long-term. And we can blame ourselves, the voters, for allowing it to happen. We are paying the price now and will continue to do so until some kind of roll-back is implemented.[/quote]

EconProf, the “weak-kneed politicians” that are generally “voted-in” are those with “experience.” Jerry Brown is a good example of this. Arnold, with no government experience at all, had to surround himself with a *fleet* of *experienced bureaucrats* before he could find his way to the men’s rooms at the State Capitol (after Davis left office). Those “experienced, weak-kneed politicians” we put in place in CA are members of the “system” themselves! I don’t see them as “weak-kneed.” I see them as looking out for their own best interests!

We can’t have it both ways so what else should we, as voters, expect?

Also, I wanted to add that government pensions are paid ONLY out of their respective retirement systems. Those systems are run by Boards elected periodically by their members. These systems are funded by a combination of employee and employer contributions and are invested for growth, dividends and income. Some systems are more “solvent” than others (depending on the management skills of each Board and investment performance).

[SK in CV]

[quote=bearishgurl]
Also, I wanted to add that government pensions are paid ONLY out of their respective retirement systems. Those systems are run by Boards elected periodically by their members. These systems are funded by a combination of employee and employer contributions and are invested for growth, dividends and income. Some systems are more “solvent” than others (depending on the management skills of each Board and investment performance).[/quote]

That’s a key point in the discussion. THE main problem with retirement plan funding has not been the plans themselves, but rather, the poor investment performance over the last 4 or 5 years.

The UC retirement plan, for instance, was so successful over the two decades preceding 2007, that no employee contributions were required and very little (on a per employee basis) from the employers. It was significantly over-funded, solely as a result of excellent investment performance. There are employees who had worked for the system for more than 20 years who had never contributed a dime. Not so anymore. If the market hadn’t crashed, this discussion would not be at the forefront as it is.

The same is true for many public retirement systems across the country.

(Please note, I’m not commenting on the appropriateness of any of the public retirement plans, only the reason it’s currently a discussion point.)

[an]

If the market didn’t crash, we wouldn’t have tea party, OWS, etc. We would have a piggington that mainly talk about RE and there wouldn’t be any debate about RE being over priced 🙂

[SK in CV]

[quote=AN]If the market didn’t crash, we wouldn’t have tea party, OWS, etc. We would have a piggington that mainly talk about RE and there wouldn’t be any debate about RE being over priced :-)[/quote]

touche 🙂

[Author]

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