Looting the Pension Funds

[BigRedBuster]

 

 

Basically the main problem was and is that pension benefits for public servants are far too generous, usually far exceeding those in the private sector. Current pensioners should be bailed out to the extent necessary to prevent hardship (but trimming six figure pension incomes is a good place to start cutting), and retirement plans for current and future workers need to be converted to defined contribution 401ks now.

 

Agree. But, I would add the same thing is true for private sector employees. When an employee stops working for an organization, that relationship should end and there shouldn't be any debt or responsibility either way to the other party.

[carlfense]

Basically the main problem was and is that pension benefits for public servants are far too generous, usually far exceeding those in the private sector. Current pensioners should be bailed out to the extent necessary to prevent hardship (but trimming six figure pension incomes is a good place to start cutting), and retirement plans for current and future workers need to be converted to defined contribution 401ks now.

I think that you might be guilty of selection bias . . .

In 2009, state and local pension plans in the United States collectively held total assets of $2.5 trillion.They served 27.5 million Americans, including 14.8 million active participants, 4.6 million inactive members, and 8.0 million retirees and other beneficiaries receiving regular benefit payments. Total benefit payments in 2009 were $187 billion, for an average benefit payment of $1,950 per month, or $23,407 per year.

Private sector pension plans covered 44 million Americans,10 including 8.4 million retired Americans in 2009.11 With total plan assets of $2.2 trillion in 2009,12 private pensions paid out some $171.5 billion in pension benefits to these retirees and beneficiaries.13 The average private sector pension benefit was $1,691 per month, or $20,298 per year.

http://www.nirsonlin...omics_final.pdf

. . . or your definition of "far exceeding" is roughly $3,000 more per year.

[HuskerLuke]

I think that you might be guilty of selection bias . . .

In 2009, state and local pension plans in the United States collectively held total assets of $2.5 trillion.They served 27.5 million Americans, including 14.8 million active participants, 4.6 million inactive members, and 8.0 million retirees and other beneficiaries receiving regular benefit payments. Total benefit payments in 2009 were $187 billion, for an average benefit payment of $1,950 per month, or $23,407 per year.

Private sector pension plans covered 44 million Americans,10 including 8.4 million retired Americans in 2009.11 With total plan assets of $2.2 trillion in 2009,12 private pensions paid out some $171.5 billion in pension benefits to these retirees and beneficiaries.13 The average private sector pension benefit was $1,691 per month, or $20,298 per year.

http://www.nirsonlin...omics_final.pdf

. . . or your definition of "far exceeding" is roughly $3,000 more per year.

 

To be clear, I didn't mean to imply that 6 figure pension incomes are the norm, although they are also far from uncommon (I see you, Mike McDonnell). My only point there was that in a case where a government or a company can't meet their pension obligations, that's where the cutting should begin.

 

Generosity of pension plans encompasses more than just the salary. First off, I'll note that an average 15% higher pension benefit is nothing to sneeze at. Second, government workers typically retire earlier. Assuming two average workers live to be 80, the public one would retire around age 60 and collect $23,000 for 20 years while the private one would retire at 65 and collect $20,000 for 15 years. In the end, the public employee would collect $460,000 in pension benefits against $300,000 for the private worker, or more than 50% more. Finally, many states exempt public pensions from income tax, while only a couple also exempt private pension benefits.

 

I don't want public employees to be poor, but I don't think they should be any better off than the private sector workers who pay their salaries and benefits. In the end, I agree with BigRedBuster. Pensions are a dangerous budgetary game to play. It's a bad idea for decision makers to be able to make promises that they won't have to keep but their successors will. It's a bad idea to put yourself at the mercy of market projections meeting market performance and the assumption that your organization's actuaries from two decades ago did their jobs well and people are dying on schedule. And finally it's a bad idea because when things inevitably start to fall apart, a lot of innocent people lose income that they were counting on. Individual retirement accounts are a much better option. What you get out depends on what you put in, and you're not going to lose your retirement because someone else was irresponsible.

[carlfense]

First off, I'll note that an average 15% higher pension benefit is nothing to sneeze at.

"Nothing to sneeze at" seems to be a bit different than "usually far exceeding."

 

Second, government workers typically retire earlier.

I read your National Review article but I didn't really see this claim backed up in your link. The closest thing I saw other than a bunch of anecdotal examples was "[p]ublic employees retire still very much in their working years." It isn't quantified at all . . . nor actually compared to the private sector. Did I miss something or are you misrepresenting what the article says?

 

Assuming two average workers live to be 80, the public one would retire around age 60 and collect $23,000 for 20 years while the private one would retire at 65 and collect $20,000 for 15 years.

From your article: ". . [t]he rest of America [non public-sector] . . . making their effective retirement age, on average, 63 . . ." Is your choice of 65 for your example instead of 63 an accident or just convenient?

 

Finally, many states exempt public pensions from income tax . . .

12, by my count. Does less than 1 out of 4 equal "many"?

[carlfense]

I don't want public employees to be poor, but I don't think they should be any better off than the private sector workers who pay their salaries and benefits.

Which public employees and private sector workers are you talking about?

 

That seems like it would be a difficult comparison to make.

[tschu]

Pensions are the absolutely dumbest retirement plan ever invented.

This is absolutely true

[HuskerLuke]

Trying to limit things to one post a day:

 

"Nothing to sneeze at" seems to be a bit different than "usually far exceeding."

 

But "far exceeding" does come into play when they are collecting 15% more per year for a longer period of time.

 

I read your National Review article but I didn't really see this claim backed up in your link. The closest thing I saw other than a bunch of anecdotal examples was "[p]ublic employees retire still very much in their working years." It isn't quantified at all . . . nor actually compared to the private sector. Did I miss something or are you misrepresenting what the article says?

It captured the overall situation pretty well. As far as I can tell, there is no national comprehensive information of this kind, but every article I've stumbled upon draws the line for retirement for public employees at around 60 and for private employees at 65 or later.

 

Federal:

 

Federal employees can retire at the age of 62 if they have worked five years, or even younger with 20 years of service. The average federal worker is 47 years old with about 14 years on the job, compared to the median age of 42 for all American workers, according to federal data.

 

Wisconsin:

 

Most municipal workers, state employees and teachers in the Wisconsin Retirement System must work until they are 65 years old to collect full benefits, but they can retire at age 55 with reduced pensions.....The average retirement age is 60.

Florida

California

 

In sum, I think citing 60 as the average retirement age for public employees, in absence of comprehensive national data, is pretty fair.

[carlfense]

Trying to limit things to one post a day:

 

"Nothing to sneeze at" seems to be a bit different than "usually far exceeding."

 

But "far exceeding" does come into play when they are collecting 15% more per year for a longer period of time.

 

I read your National Review article but I didn't really see this claim backed up in your link. The closest thing I saw other than a bunch of anecdotal examples was "[p]ublic employees retire still very much in their working years." It isn't quantified at all . . . nor actually compared to the private sector. Did I miss something or are you misrepresenting what the article says?

It captured the overall situation pretty well. As far as I can tell, there is no national comprehensive information of this kind, but every article I've stumbled upon draws the line for retirement for public employees at around 60 and for private employees at 65 or later.

 

Federal:

 

Federal employees can retire at the age of 62 if they have worked five years, or even younger with 20 years of service. The average federal worker is 47 years old with about 14 years on the job, compared to the median age of 42 for all American workers, according to federal data.

 

Wisconsin:

 

Most municipal workers, state employees and teachers in the Wisconsin Retirement System must work until they are 65 years old to collect full benefits, but they can retire at age 55 with reduced pensions.....The average retirement age is 60.

Florida

California

 

In sum, I think citing 60 as the average retirement age for public employees, in absence of comprehensive national data, is pretty fair.

You can use whatever numbers that you like for your hypotheticals . . . but the credibility of your argument will suffer when you're cherry picking (or randomly assigning) numbers.

 

If the facts support your argument then you should use them. Claiming (while posting a link that disproves the same) that private sector workers retire at 65 to inflate your numbers is poor form.

[HuskerLuke]

From your article: ". . [t]he rest of America [non public-sector] . . . making their effective retirement age, on average, 63 . . ." Is your choice of 65 for your example instead of 63 an accident or just convenient?

 

Mistake on my part, I was assuming the traditional age at which people (government workers excluded) retire. In any case, rerunning calculations from the 63 vs 60 benchmark, still puts the average public worker 33% ahead of the private worker in total benefits collected.

 

12, by my count. I guess ~24% equals "many"?

3?

 

I view that as pretty significant, especially with huge states like Illinois and New York on the list.

 

Which public employees and private sector workers are you talking about?

 

That seems like it would be a difficult comparison to make.

 

We're on pension benefits. You've already stated that pension checks for public workers is on average 15% higher than private workers. I've presented pretty conclusive evidence that public workers retire earlier, and that more states give public employee pensions give tax breaks than there are giving similar breaks to private pensions. In sum, public employees have better pension benefits on average than their counterparts in the private sector. It's my contention that these benefits should be brought in line with those of the people who are paying for them.

 

If the facts support your argument then you should use them. Claiming (while posting a link that disproves the same) that private sector workers retire at 65 to inflate your numbers is poor form.

 

As is nitpicking over process when a fact is corrected and does not substantially change the overall argument.

 

I'm arguing that public sector workers receive superior pension benefits when compared to private sector workers. I'm not exactly sure what you're arguing because all I've seen so far is a complaint about a number that reduces the pension gap between public and private workers from 50% all the way down to 33.3% - before favorable tax treatment is taken into account. Typically at this point, it's your duty to either refute the idea that public employees receive superior retirement benefits when compared to comparable private workers (good luck) or argue why public servants deserve to be taken care of better in retirement than the workers who fund said retirements.

[carlfense]

Mistake on my part, I was assuming the traditional age at which people (government workers excluded) retire.

An argument about specifics based on mistakes and assumptions?

 

We're on pension benefits.

Correct. Then you added this: "I don't want public employees to be poor, but I don't think they should be any better off than the private sector workers who pay their salaries and benefits."

 

I'm asking which private sector workers and which public sector workers you are talking about. As in, (for example) do you think that a medical doctor employed by the government should be paid more than a fast food worker in the private sector?

 

You've already stated that pension checks for public workers is on average 15% higher than private workers.

Around ~$3,000 annually.

 

I've presented pretty conclusive evidence that public workers retire earlier . . .

Must have missed that. Where? Looks to me like you've provided a link about federal employees and links from a few states.

 

Is that what you're referring to as "pretty conclusive"?

 

It's my contention that these benefits should be brought in line with those of the people who are paying for them.

Sounds like redistribution of wealth.

[carlfense]

As is nitpicking over process when a fact is corrected and does not substantially change the overall argument.

If you're going to make specific assertions then you should back them with specific facts. If you stretch the truth it makes it look like the facts don't support your argument.

 

I'm arguing that public sector workers receive superior pension benefits when compared to private sector workers.

Some probably do. Some probably don't. I'm curious who you're comparing and why.

 

I'm not exactly sure what you're arguing because all I've seen so far is a complaint about a number that reduces the pension gap between public and private workers from 50% all the way down to 33.3% . . .

If you scroll up slightly you’ll see yourself referring to a 15% difference as “far exceeding.” Now you’re downplaying your exaggeration of the difference by about 66%.

 

This is interesting.

 

Typically at this point, it's your duty to either refute the idea that public employees receive superior retirement benefits when compared to comparable private workers (good luck) or argue why public servants deserve to be taken care of better in retirement than the workers who fund said retirements.

Again. You seem to be missing the point. Who are you comparing and why? Should certain public employees receive greater compensation than certain private employees?

 

I’d say yes. You?