http://news.yahoo.com/s/ap/us_benefit_envy;_ylt=Aoed_Co8CAujI81JXHd.1pCGWo14
Anger brews over government workers' benefits
By GEOFF MULVIHILL, Associated Press Geoff Mulvihill, Associated Press – 2 hrs 9 mins ago
When Erin McFarlane looks at public workers, she sees lucrative pension benefits she doesn't ever expect to get. And it makes her mad.
"I don't think that a federal employee or government employee is worth any more than anybody else who does their job and does it well," said the Slinger, Wis., woman. She's been working a couple of bartending jobs since January, when she was laid off from her job at a Harley Davidson plant after almost a decade.
She's not alone in seeing public servants as public enemies in some ways. For some everyday Americans, it's a case of pension envy.
For McFarlane, 36, it's part of a ubiquitous discussion, at the bars where she works and on Facebook. And it's the center of some of the biggest political battles playing out in state capitals across the country as governors say their states can no longer afford the benefits that public employees have been promised.
....
For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a pension of $57,000. And many of the New Jersey's public-sector retirees have no or low premiums for their health insurance.
For a private-section worker who retires at 55, relying solely on a 401(k) without an employer match, it would take a $100 contribution to a plan every week for 30 years and getting an annual return over 7 percent to get to the same level of pension benefit as the public worker retiring at that age. Those benefits would run out after 25 years for the 401(k) retiree.
....
Originally posted by zeeblebot...
http://news.yahoo.com/s/ap/us_benefit_envy;_ylt=Aoed_Co8CAujI81JXHd.1pCGWo14
Anger brews over government workers' benefits
By GEOFF MULVIHILL, Associated Press Geoff Mulvihill, Associated Press – 2 hrs 9 mins ago
When Erin McFarlane looks at public workers, she sees lucrative pension benefits she doesn't ever expect to get. And it makes her mad.
...[text shortened]... hat age. Those benefits would run out after 25 years for the 401(k) retiree.
....
Hetty Rosenstein, the New Jersey director of the Communications Workers of America, which represent New Jersey government workers in several fields, says she gripes about her members' pensions are misplaced.
"There's pension envy because people who are working in the private sector, they're being denied pensions," she said.
...
"Oooh no that person makes more money than me! Not fair!"
I don't sympathize when it is directed at Wall Street bankers, and I don't sympathize when it is directed at government employees.
Erin McFarlane has three choices:
1) Get her employer to kick in the wage/benefits she wants
2) Get a job in the government that pays the wage/benefits she wants
3) Stop whining and be glad she has a job.
Originally posted by telerionWell, 1) might entail organizing a union in order to bargain for the kind of benefits she probably had at Harley (since I once sat with Harley workers, in pension talks; maybe they lost their pensions since then)...
"Oooh no that person makes more money than me! Not fair!"
I don't sympathize when it is directed at Wall Street bankers, and I don't sympathize when it is directed at government employees.
Erin McFarlane has three choices:
1) Get her employer to kick in the wage/benefits she wants
2) Get a job in the government that pays the wage/benefits she wants
3) Stop whining and be glad she has a job.
Originally posted by zeeblebotThese numbers seem somewhat arbitrary, zeeb. Start with the “these benefits would run out after 25 years for the 401(k) retiree”. Well, that assumes that that retiree did not (or could not) convert the lump-sum accumulation into a lifetime annuity. If they did, the benefit amount would be something less, based on life expectancy at that age.
http://news.yahoo.com/s/ap/us_benefit_envy;_ylt=Aoed_Co8CAujI81JXHd.1pCGWo14
Anger brews over government workers' benefits
By GEOFF MULVIHILL, Associated Press Geoff Mulvihill, Associated Press – 2 hrs 9 mins ago
When Erin McFarlane looks at public workers, she sees lucrative pension benefits she doesn't ever expect to get. And it makes her mad.
...[text shortened]... hat age. Those benefits would run out after 25 years for the 401(k) retiree.
....
But the same can also be said for the pension amount: i.e., if the recipient has the option to take a 25-year payment rather than a lifetime annuity.
The point is that, in either case, the lump sum accumulated (either in the 401(k) or the pension fund) will provide various payout amounts, actuarially adjusted. [The pension fund, however, has actuarial costs spread over the group, and so should cost less in terms of overall funding.]
Pick an age: say 65. Call it the “normal retirement age” (a technical definition under a retirement plan). To provide a specified benefit amount at that age requires funding, based on interest and mortality assumptions. If an earlier retirement age is allowed, then either (a) it will be subject to a benefit reduction, or (b) it will require greater funding amounts. Pick another age: say 60—or 70. The same holds.
The underlying issue is, simply, costs of funding (which can be actuarially calculated in advance)—and whether that funding actually takes place. In the case of collectively-bargained benefits, these costs are generally (at least in the private sector) stated in terms of wage equivalence—since they represent compensation that is deferred into a pension fund rather than paid directly as wages.* The problem in many public pension funds (and private pensions are not immune from this) seems to be that the appropriate funding either (a) did not take place, (b) was not carried out according to sound actuarial calculations, or (c) suffered from unexpected investment losses.
If, however, you have in mind some “ethically mandated” retirement age, and/or income replacement ratio, then you have to argue that. In the examples cited, the 30-year employee received a benefit equal to approximately 54% of pay at age 55, or 63% of pay at age 60—those are income replacement ratios that seem to be related to age at retirement, as well as ending pay. What do you think a “fair” income replacement ratio would be at age 65? Do you think that is a reasonable question? What would you think of a benefit that offered a greater replacement ratio before eligibility for Social Security, but less, from the pension plan, thereafter (a “level income” option, again actuarially calculated; some plans offer them)?
Those are rhetorical questions really, just to point up that, in reality, none of this is about someone getting “too much”—it is about cost. And, in the case of public workers, all labor costs are ultimately the burden of the taxpayer. There may be “political gaming” that takes place, but that has nothing to do with defining a “fair” level of compensation.
Of course, to the extent that this is all about envy, then (with my small caveat), I agree with telerion.
______________________________________________
* And, setting aside the cost advantages of group funding, $100 deferred into a pension plan to provide a certain benefit based on a 7.0% interest assumption is the same as $100 personally deferred from wages into a retirement savings (401(k)) plan at 7.0% interest. They will not provide a different benefit at any given age for a specified payout option (e.g., lifetime annuity or a period-certain). The only difference is whether or not that deferral is part of a worker’s compensation, or comes out of a worker’s compensation after—in the latter case, the worker is simply making $100 less in total pay.
Originally posted by vistesdIt's no that I'm necessarily for/against public employee benefits, compensation, or bargaining rights. There does need to be (and really has needed to have been for a long time now) a serious discussion about what is sustainable. Looking at what's going on in WI, We can all see why politicians (and therefore the public) have avoided the issue until now. I suspect something similar will happen in the future with tax/spending reform at the federal level.
Well, 1) might entail organizing a union in order to bargain for the kind of benefits she probably had at Harley (since I once sat with Harley workers, in pension talks; maybe they lost their pensions since then)...
All that said, when I hear the argument being framed like the way it is here, I roll my eyes. Basically, this woman is saying other people should get less and she should get more.
To which I reply, "I know. There's this MD that lives near me and she makes three times as much as me. That's not fair. We should restrict doctor's pay (or tax them more)."
I can understand a bricklayer or a carpenter who has to retire at 55. But a bureaucrat??? Geez.
Desk bound bureaucrats should have to work until at least 70 to have their full retirement benefits kick in. Teachers too. When you're no longer effective in the classroom, they can re-assign you to some sort of administrative function in the district.
Originally posted by sh76I'm thinking they should introduce a retirement age with former Senator Byrd in mind. 😉
Desk bound bureaucrats should have to work until at least 70 to have their full retirement benefits kick in. Teachers too. When you're no longer effective in the classroom, they can re-assign you to some sort of administrative function in the district.[/b]
it's nice of y'all to put down to envy and jealousy criticism of a system that retires public workers a decade or more earlier than private workers (25 pct of a 40-year career!), that is maintained separately from the taxpayers own social security, that that taxpayers are on the hook for to make good for losses even when the public pension fund managers screw up, that public sector pensions are maintained separately from the social security system forced on private taxpayers, a social security system that is invested in T-BILLS!
http://www.pbs.org/nbr/site/onair/transcripts/pimco_dumps_government_bonds_110309/
PIMCO Dumps Government Bonds
Wednesday, March 09, 2011
SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: The world`s largest bond fund is betting against bonds. PIMCO`s total return fund has sold off its government bond holdings to zero as of the end of February.
You know, Tom, this is a strong signal from PIMCO`s flagship fund that it sees little value in owning U.S. treasuries.
TOM HUDSON, NIGHTLY BUSINESS REPORT ANCHOR:: It certainly is, Susie. As a result of those bond sales, cash now makes over 22 percent of this fund, or $54 billion.
Now, we should note, Susie, the fund does still own other kinds of bonds. It`s holdings are diversified among mortgage bonds, corporate debt, foreign bonds and some municipal securities.
GHARIB: So what`s the reason behind the bond fire sale?
Joining us now: William Gross, he`s the founder and co-chief investment officer of PIMCO.
...
GROSS: Well, we haven`t lost faith in the U.S. government. You know, America is still strong and the economy is growing, and we have, you know, perhaps $30 billion or $40 dollars worth of U.S. treasury bills. But those are shorter maturity obligations.
And so, the argument really that we have is really a one of valuation. We simply think that longer dated treasury yields, and to cite a few examples, two-year at 70 basis points or 0.7 percent, and five-year treasuries at 2 percent plus or minus simply aren`t reflective of where they should be or eventually going.
You know, if yields move higher in these longer dated segments, then prices move lower. So, it`s not a negative thing in terms of the U.S. It`s simply a over-evaluation in terms of price.
...