Public Pension Millionaires

[vt]

Re: Public Pension Millionaires

401K plans can be redesigned to work much better, be fairer and much less expensive for workers, This already exists by the way with cost as little at 25 basis points or 65 with advice vs. up to 2% for mutual fund run plans now. The 401K revolution has just begun,

Pensions are very expensive too, thorough not any more than 401ks now. The difference is that the worker can now own their net worth instead of having it disappear if they die early. Some pensions are not indexed to inflation. We can make 401Ks much better and less expensive than pensions.

A major part of the problem is that our school systems do little or nothing to teach children about how the financial world works. We have students that can't work a cash register or write a check. They understand nothing about savings, compound interest, or the effects of inflation.

What has happened to education in this country?

[BadJuju]

Re: Public Pension Millionaires

Who uses checks anymore, though? I've never used one and I'm 28.

[vt]

Re: Public Pension Millionaires

But do you really understand credit cards and debt? There's a failure to educate there too.

[BadJuju]

Re: Public Pension Millionaires

Indeed I do! Although I have massive amounts of debt, but that's mainly from not caring as opposed to not realizing.

[vt]

Re: Public Pension Millionaires

I hope you can reduce it to zero within a reasonable time. It is negative compounding, which in effect could take you DECADES to pay off at the minimum payment.

See if you can join a local credit union. I believe they have programs to help people get out of debt that don't charge you high fees like the bansters. Your local and state governments may have free programs too. Your local public library has books on the topic.

We all hate to be debt slaves and/or have friends and family that are.

Good luck.

[Thailandnotes]

Re: Public Pension Millionaires

Pre Matt T. 2011
...
on how in the late 90’s corporate pensions were ove-funded by 25% setting all this up. Ellen Schultz was on C-span booktalk…worth a listen

Retirement Heist

“’As far as I can determine there is only one solution” to the CEO’s demand to save more money.* ‘That would be the death of all existing retirees.’”
-memo from-human resources manager at Varity Corp.

It’s no secret that hundreds of companies have been slashing pensions and health coverage earned by millions of retirees.* Employers blame an aging workforce, stock market losses, and spiraling costs— what they call “a perfect storm” of external forces that has forced them to take drastic measures.

But this so-called retirement crisis is no demographic accident. Ellen E. Schultz, award winning investigative reporter for the Wall Street Journal, reveals how large companies and the retirement industry—benefits consultants, insurance companies, and banks— all* played a huge and hidden role in the death spiral of American pensions and benefits.

A little over a decade ago, most companies had more than enough set aside to pay the benefits earned by two generations of workers, no matter how long they lived. But by exploiting loopholes, ambiguous regulations, and new accounting rules, companies essentially turned their pension plans into piggy banks, tax shelters, and profit centers.

Drawing on original analysis of company data, government filings, internal corporate documents, and confidential memos, Schultz uncovers decades of widespread deception during which employers have exaggerated their retiree burdens while lobbying for government handouts, secretly cutting pensions, tricking employees, and misleading shareholders. She reveals how companies:

Siphoned billions of dollars from their pension plans to finance downsizings, and sold the assets in merger deals

Used loopholes in discrimination rules to tap pension plans to pay executive parachutes, pensions, and deferred compensation.

Exploited new accounting rules, which actually gave employers an incentive to cut benefits even when pension plans had more than enough money, because the moves generated gains that boosted profits by billions.

Used the accounting rules to inflate retiree health obligations to justify cutting benefits, and enjoy a bigger boost to income when they subsequently cut them. The accounting rules are so flexible that employers have been able to use their retiree plans to manage earnings, using well-timed benefits cuts, changes in assumptions, and contributions to the plans.

These maneuvers coincided with a shift in executive pay practices: compensation was tied to performance, so the retiree cuts boosted executive pay—and thus deferred compensation, and executive pensions. Obligations for executives (deferred comp and SERPS) exceed a billion dollars at many large companies.

At a growing number of companies, executive legacy liabilities exceed liabilities for the qualified pension plans. The executive obligations are largely hidden– aggregated with the qualified plan obligations,* which has enabled employers to blame their “costly” pension plans, when, in fact, in many cases only the nonqualified executive plans are hurting earnings.

To finance their executive pensions, companies –especially banks in recent years, including those that received massive government bailouts—have purchased billions of life insurance on employees, and use the policies as informal executive pension funds.

At a time when 401(k) savings plans are supposed to become the replacement for pensions, employers continue to use the plans to profit the companies.* Companies used 401(k)s as tools to kill healthy pension plans, and capture the surplus assets for themselves, and they continue to use them as part of leverage loan deals, to make borrowing costs lower.
And though 401(k) s are supposed to be the savings plans for the masses, employers shut millions of low-paid workers out of the plans, and provide those in the plans with less generous contributions.

To facilitate these maneuvers, employers have steadily and stealthily whittled away legal protections for employees and retirees, and have little to fear if sued: They simply drag out the cases until the retirees give up or die.

The “reforms” they and employers are proposing, supposedly to improve retirement security, would expand their ability to continue exploiting retirement plans, at the expense of employees and retirees.

Though Retirement Heist focuses on large companies—which drive the legislative agenda—the same games are being played at smaller companies, non-profits, public pension plans and retirement systems overseas. Nor is this a partisan issue: employees of all political persuasions and income levels—from managers to miners, pro-football players to pilots—have been slammed.

[Woodsman]

Re: Public Pension Millionaires

I hope you can reduce it to zero within a reasonable time. It is negative compounding, which in effect could take you DECADES to pay off at the minimum payment.

See if you can join a local credit union. I believe they have programs to help people get out of debt that don't charge you high fees like the bansters. Your local and state governments may have free programs too. Your local public library has books on the topic.

We all hate to be debt slaves and/or have friends and family that are.

Good luck.

I'm lock step with vt on this, BJ.

Pay it off and from then on every dollar you earn is yours. And if there's no way to pay it, then at least consider talking to someone you know who is knowledgeable about bankruptcy. You may find one day that you'll lose your taste for burning the candle at both ends and running hell bent for leather.

I had the time of my life anticipating an untimely death, but damn if I'm not still here 30 years later. The same might happen to you if you're unlucky .

[dcarrigg]

Re: Public Pension Millionaires

I can hire one half of the working class to kill the other half.

From one of the original FIREmen...

[jk]

Re: Public Pension Millionaires

bk, you and i have both been members here since '06, and i clearly recollect you denouncing teachers and their benefits back then, and i think with regularity every year since. you also always mention that your parents are/were teachers. how are they doing?

[BK]

Re: Public Pension Millionaires

Exactly. Great memory. The big run up in benefits happened after my parents retired. It was the 1990s that really set the stage for pension plans for teachers that are not supportable financially. I also have a couple of teacher friends who drone on when they are "working without a contract" - which is code for we haven't gotten our regular 2-3% annual increase and those taxpayers claim they can't afford it.

Where will the money come from to pay defined pension plans for teachers who are all now making $75,000 - $95,000 or add in coaching duties plus class advisor and you are on your way to $110,000 - defined pensions that may be 60%-80%?

I would argue that the last 30 years this was almost achievable because interest rates were falling off the early 1980s highs and loads of income could be generated throuhg buying bonds while interest rates falling drove up their value. How the heck is any of these pensions payable when interest rates are at a 30-40 year low. The Pension fund manager now has to become an expert stock picker or find a way to reduce payouts.

Having parents who work inside the industry makes you understand what a scam the business is. I hear regularly how teacher are so important and good schools.....when in reality the children who thrive have great parents watching over the student. Students with great and involved parent do will in great school districts or bad. I suspect the peer influence in great school districts is way more beneficial than the teachers.

None of my opinions have any data to back them .......so they are worth what you pay for them.

Yes, I come from a family of teachers and my father was active in helping the Union get going in his school district. When the good ole USA was a manufacturing giant being a teacher was a low paying professional job. Today there are many school districts that are over paying teachers the results are higher property taxes and towns on the brink of financial disaster.

Any teachers in your family?

[vt]

Re: Public Pension Millionaires

No one should denigrate any profession. Teaching is a noble profession but so are others, and any worker that is not a professional is still contributing to the economy.

The key point is that our system of benefits, which are a part of overall compensation, have reached a point where we may no longer have the wherewithal to support them. Part of the problem is the poor performance of equity markets, and now this is compounded by low interest rates. States can no longer support generous pension systems, especially ones where little contribution comes the recipients. Look at how much is contributed by private workers to social security, medicare, and 401Ks vs. by public workers to their plans.

Maybe demographics in the next decade will provide the growth to fund these plans, maybe not.

Two questions remain:

How are we going to pay for promises made with pensions, social security, and health care benefits for retirees when people are living longer?

Why should public workers, whose pay in now on par with private workers, have gold plated benefits when the public does not?

[Thailandnotes]

Re: Public Pension Millionaires

Where will the money come from to pay defined pension plans for teachers who are all now making $75,000 - $95,000 or add in coaching duties plus class advisor and you are on your way to $110,000 - defined pensions that may be 60%-80%?

You are trolling.... "who are all now making $75,000 - $95,000"

Average elementary teacher is making less than 35,000.

Where are you located? Throw up some real data.

[vt]

Re: Public Pension Millionaires

Thailandnotes, here's the real data; your figures are low

http://www.washingtonpost.com/blogs/...tate-by-state/

Here's the average for American citizens:

http://www.ssa.gov/oact/cola/AWI.html

Teachers appear to be doing better on salary, plus their benefits are a lot better.

[BadJuju]

Re: Public Pension Millionaires

Thanks for the tips, good people; however, I am not worried about the debt. Anyway, it is all student debt, so unless I make a certain amount of money, I don't even have to pay it. I have neither a job nor income, so it is a moot point.

[BK]

Re: Public Pension Millionaires

Here is Data:
Massachusetts - average salaries http://profiles.doe.mass.edu/state_r...rsalaries.aspx
Chatham NJ - Starting pay $55,000 http://www.chatham-nj.org/page/235
Wayland Mass contract link - starting pay is $42,000 http://www.wayland.k12.ma.us/UserFil...forpdf_002.pdf
Chicago Public School Salary data 2011 - lots of well paid teachers: http://www.cps.edu/About_CPS/At-a-gl...r_08_01_11.pdf
DadeCounty Florida data: $32,000 - $70,000 http://www.dadeschools.net/spanish/e...df05/App_E.pdf
DadeCounty proposal - starting salaries to go to $40,0000 - http://www.dadeschools.net/employees..._successor.pdf
New York City teacher salary data $45K-$100K http://schools.nyc.gov/NR/rdonlyres/...edule20083.pdf
Buffalo New York Teacher salaries http://www.buffaloschools.org/upload...0Table.xls.pdf
Burlington-VT $29,000-$55,000 http://bsdweb.bsdvt.org/Board/budget0304/d3.htm

Please let me know if I need more data to make my case.

Thank you