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Forum Post: Are public sector pensions for jobs that aren't high risk right?

Posted 3 years ago on Oct. 25, 2011, 7:48 p.m. EST by JonFromSLC (-107) from West Valley City, UT
This content is user submitted and not an official statement

I'm asking this because I've been hearing/seeing a lot of problems the states are having in regards to paying their public employee pensions. In Alabama a town had roughly 125 people getting a pension check, and they ran out of money so they stopped paying them. Other states are running HUGE deficits due to not being able to pay the bills due to the pensions they're obligated by law to pay.

Is it really fair for the people of the community to pay other peoples pensions years after they've stopped benefiting the community? I understand Police and Firefighters and HAZMAT employees but gutter sweepers? Sewer pipe maintenance men? I find this sort of analogous to public sector jobs being unionized then demanding bargaining rights. Who exactly are they bargaining with? The public. So it's the Unions vs. the public? That's not really fair for the public.

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118 Comments


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[-] 2 points by paplanner (58) from Mt Union, PA 2 years ago

no pensions for anyone, no social security, no medicare.....work til you drop, depend on the kindness of the job creators and accept the fact that you have no right to exist unless you happen to be born into the right family. That's where you want to go, fine. Blame the unions, blame the public sector employees, blame those damned children for not being born rich, white and heartless. Blame anyone you want, keep your eyes closed, because regardless of what you believe, and what the power elite believes, history limits the rule of madmen, and 30 years of mafia economics and government are going to come to an end.

[-] 2 points by StevenRoyal (490) from Dania Beach, FL 3 years ago

Pension plans are contracts that a group of employees of an employer, in this case a local government, entered into together. Every pension plan is set up with assumptions and a financial structure. Ask an actuary.

Just because someone is retired, does that mean they are not spending money, going to church, and otherwise benefiting a community?

Are retired people of no benefit? Are you suggesting we just euthanize everyone who is collecting social security because it is a public expense?

[-] 1 points by alouis (1511) from New York, NY 3 years ago

"Are you suggesting we just euthanize everyone who is collecting social security because it is a public expense?"

That's the logic of it.

[-] -1 points by JonFromSLC (-107) from West Valley City, UT 3 years ago

No I'm not saying euthanize anyone. i'm saying that once someone stops working their productiveness obviously goes down. Aside from medications old people really don't spend that much money. They travel but aren't generally as spendy as the younger travelers.

[-] 0 points by betuadollar (-313) 3 years ago

I think this is more a case of eating our own and it's really rather despicable.

[-] 2 points by alouis (1511) from New York, NY 3 years ago

Incredible. Once upon a time pensions for employees who got old or disabled were not controversial. And the rich paid a marginal tax rate of 90%. "The public" is a non existent fallacy. There are people who live from working and people who legally take the fruits of others' labor.

The deficits are not caused by workers too old or ill to work. They are caused by the roughly one percent who benefit immensely from society but refuse to pull their weight,

[-] 2 points by bronxj (150) 3 years ago

I don’t think anyone is totally against public pensions for people to old or ill to work. It is just that in many cases, at least in New York City, old can be anywhere from 40 (sanitation worker) to 55 (schoolteacher) and we regularly read about supposedly disabled public sector employees receiving disability pensions (completely tax free) competing in marathons, etc . Bear in mind, that these pensions are based on salaries and overtime that can reach well into the six figures , are exempt from state and local tax no matter what the amount (unlike private pensions) , and are based on contracts and preferential legislation that the residents at large never got a chance to vote on.

[-] 0 points by betuadollar (-313) 3 years ago

Again, these pensions are theoretically fully funded. Municipalities contribute in accordance with their contractual responsibilities. The problem is that the size of government has outgrown or outpaced the politician's willingness to fully tax largely due to irresponsible spending.

[-] 0 points by alouis (1511) from New York, NY 3 years ago

Try lifting and hurling heavy cans of trash for twenty years. Your joints get weak. Try standing in front of thirty kids for thirty years. You'll need a break.

[-] 1 points by bronxj (150) 3 years ago

I have no doubt sanitation work is physically taxing ; but there are rules in place to keep it from being overly taxing such as limitations on the weight and amount of bulk which can be left out for pickup (eg no more than 6o lbs, no more than 5 pieces) and the average trash can weighs no more than 30 lbs full. I can see an argument that the job can’t be done until the 60’s----but 50% of the 3 highest years earnings (including OT) state and city tax free at 40 ? It does seem a bit excessive, even to me, and I have done a shitload of construction labor work in my life. And as far as teaching goes, I’m sorry but I don’t see any real physical hardship associated with the job

[-] 0 points by alouis (1511) from New York, NY 3 years ago

Rules protecting workers' health? Gee where did such a radical notion start?

[-] 1 points by bronxj (150) 3 years ago

I see that you think that early retirement is some type of health protection rule. But explain to me how exempting one pension from tax (public sector pension) but not another is a "rule protecting worker's health." ?

[-] 0 points by alouis (1511) from New York, NY 2 years ago

The part of the pension that is given by the government is taxed. The part the worker contributed isn't. I was refering to rules limiting the weights sanitation workers have to lug. No doubt from a union. And heavy physical labor does wear a person out faster than paper pushing. Allowing a relatively early retirement makes sense in those instances. Would you want a 66 year old fireman to carry you down a ladder?

[-] 1 points by bronxj (150) 2 years ago

You are wrong. In New York local, state and federal retirees don’t pay any state or city income tax on their defined benefit pension whether it’s $20,000 , $80,000 or $1,000,000. By contrast, recipients of a private pension may exclude only $20,000

[-] 0 points by alouis (1511) from New York, NY 2 years ago

state and city. that's correct. there is the federal though...

[-] 1 points by bronxj (150) 2 years ago

Well, isn't that preferential? NY should either exempt all pensions, exempt no pensions, or exempt all pensions up to a certain threshold.

[-] 0 points by alouis (1511) from New York, NY 2 years ago

I keep coming back to this: These were the terms promised to these people when they took their jobs. Why is it so easy to just reneg on that promise after 20 - 30 or more years of working under that promise and so hard to tax the rich and ell then to take their debt and shove it? PS I don't plan to respond to you again. We both understand where each other stand.

[-] 1 points by bronxj (150) 2 years ago

A state and city tax free pension is not something “promised” as you put it. It is not even part of the contract. It is a preferential section of the NYS Tax law and tax law is amended all the time. By the way, at what point did I say to break any contracts? Contracts expire and come up for renewal. What I would like to see is a process whereby citizens like myself who are required to fund the contract to ratify the contract through referendum.(by the way, the same referendum process should be in place for any local multi year contract or contract above a certain size, not just labor contracts) Also, I would like to see any existing preferential legislation put up for ratification through referendum or struck down. Before special privileges are given to anybody in a community at the expense of others, all should have a say in whether or not those special privileges should be bestowed . If you are so for the working people, the democratic process and the elimination of undue influence in politics , why do you have a problem with that? If you are a state or city worker, I am not against you, but please realize that something does not stop being preferential simply because you are the one who benefits. What hypocrisy!

[-] 0 points by alouis (1511) from New York, NY 3 years ago

Small potatoes. The fed has lent for infinity trillions of dollars we will be expected to cough up at zero percent interest. The rich take this and speculate driving up costs of food for example. Wake up. It's a good thing for workers to be able to retire. Abuses can be policed but the principle is a good one.

[-] 0 points by betuadollar (-313) 3 years ago

Actually I think deficits are caused by governments that are highly irresponsible.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

Whatever the cause, whoever's at fault, mankind is up the creek and what's the paddle? Liberation from the debt trap. Yes of course the litle people can have their homes, jobs and pensions protected but not if we stay the course we are on!

[-] 0 points by betuadollar (-313) 3 years ago

Nope. Not if we stay the present course. On that, I agree.

[-] 0 points by JonFromSLC (-107) from West Valley City, UT 3 years ago

90% tax on the rich. You guys and your class warfare are getting pretty pathetic.

Where is the incentive to actually work hard when you get to keep 10% of your money? How about tax people depending on the choices they make? If you drive a Hummer, you pay $7 a gallon for gas. If you drive a Civic you pay $2. If you drive a hybrid it's $1 a gallon. That way people would actually start paying their "Fair Share"

That would ease the burden on the poor, and make the rich who CONSUME more pay a higher premium for common goods. Raise minimum wage to $10 and people would start seeing drastic upticks in consumer spending, which would increase DEMAND and there would be more jobs. Hmm... a 20 second rant on a forum and I already helped to solve the problem.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

The marginal rate was 90% during the greatest expansionary period on our history. Things were good or at least seemed to be improving just about for everyone. Look it up. Counterintuitive maybe but it worked pretty well.

http://ntu.org/tax-basics/history-of-federal-individual-1.html

[-] 1 points by testing (19) 2 years ago

Globalization and technology have changed the dynamics of business since the 1950's. If we were to tax these people at 90% they would leave the US. I know some would stay, but its just as easy to run a company from the Bahamas or other tax shelters as it is to run it from Texas. The step after that is to incorporate their company outside the US to cut the corporate tax rate more.

[-] 0 points by alouis (1511) from New York, NY 2 years ago

Eventually what the world needs is global regulation and taxation. Trouble is the world is now run by crooks.

[-] -1 points by JonFromSLC (-107) from West Valley City, UT 3 years ago

Taxes only went up when we were at war. And back in the day 200,000 was a LOT more money than it is today. And there were way less people actually making that much money so it didn't matter. Expansionary period as in... production rates? We were in wars and had to create things. Also, if you look at the people working back then and compare them to the people working nowadays... it was different. The people were different. There is no work ethic these days.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

Read the link, then comment. Okay?

[-] 1 points by MattLHolck (16833) from San Diego, CA 2 years ago

san diego lost their pension fund for their workers

[-] 1 points by gtyper (477) from San Antonio, TX 2 years ago

The problems is inefficient budgeting from the government - both local and federal.

I've been saying it over and over - US government entities are structured in a way that promotes inefficiency. Thus it promotes poor usage of capital and resources.

How can one remain solvent and liquid, when rewards are given based on inefficient utilization?

[-] 1 points by Shalimar (167) from Martinsville, IN 2 years ago

The retired employees and the employers had a legal agreement that if the employees worked there for a certain number of years they would get a retirement package. This agreement was part of their benefits package. Basically instead of paying them more money the company offered them retirement. The employees kept their part of the agreement.

[-] 1 points by Unger (22) 2 years ago

If there is a segment of the 99% that is not quite as bad off as the average, we ought to be fighting to raise up the average, not to drag down those doing a little better. Gutter sweepers do useful, important work and ought to be respected a lot more than those who sit in offices and manipulate stocks over the telephone.

[-] 0 points by JonFromSLC (-107) from West Valley City, UT 2 years ago

I agree with you 100%. Important jobs aren't just the high paying ones. Trash truck drivers, Janitors, house keepers at nursing homes and hospitals, street sweepers are all necessities.

[-] 1 points by betuadollar (-313) 3 years ago

If you work for a private company and contribute towards a pension, you are legally "vested" - theoretically, legally, all is funded. More, there is a perpetual contract as a matter of policy, as in, work for us for 30 years and we'll give you a pension.

Pensions are increasingly difficult to acquire in the US due to the outsourcing of manufacturing and the import of cheap products. Long term employment no longer exists unless, of course, we are willing to opt for civil service.

How is it that municipalities have failed to fully fund the pensions their employees contribute to? And is bankruptcy constitutional in light of the perpetual, long term contract? I don't believe it is.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

the 1% will make it legal.

[-] 0 points by betuadollar (-313) 3 years ago

Nah, I don't think so... it ain't gonna fly.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

http://abcnews.go.com/US/rhode-island-city-turns-pensioners-avoid-bankruptcy/story?id=14115872

CENTRAL FALLS, R.I. — The retirees came from near and far, gathering in a muggy auditorium here to listen to an urgent pitch: give back a big chunk of your pension or risk losing it all.

http://www.cbsnews.com/stories/2011/02/20/sunday/main20034120.shtml

At 66, Alfred Arnold considers himself lucky, in a way. In September 2009, when the city of Prichard, Alabama, suddenly stopped paying pension checks to its retirees, at least he was able to work, as a security guard at a mall in Mobile.

And this past Christmas, instead of exchanging gifts, mall employees gave all the money they would have spent on each other to Alfred and his wife Jackie.

"They knew we didn't have a pension, we wasn't getting paid," said Alfred.

"How did you feel?" Teichner asked about the gift.

"Oh, man, that was devastating. I almost cried."

Alfred Arnold was Prichard's first black firefighter. He retired after 35 years, as a captain.

"If I didn't retire, I might not make it to the next day, going in the fire. You know, it gets too strenuous, you know? So I had to retire because I had heart problems."

[-] 0 points by betuadollar (-313) 3 years ago

Try it in NY. Really. All of those democrats in office will disappear over night. And the party will cease to exist.

[-] 1 points by alouis (1511) from New York, NY 3 years ago

The democrats are no longer the party aligned with unions and civil rights organizations. In NYC they are a mere shadow of their former selves. Look, Obama is to the right of where Nixon was and in his day he was a fascist. If it flies in Rhode Island it will fly across the US without a real hard pushback. But don't count on mythical party of the people.

[-] -1 points by betuadollar (-313) 3 years ago

Huh? Nixon was a fascist? And Obama is nowhere near close to right.

[-] 1 points by alouis (1511) from New York, NY 2 years ago

He did kill a few million people in Indochina and froze wages and prices. Then he broke into the opposition party HQ, and he kept an enemies list too.

July 22, 2011, 12:55 PM Obama / Nixon Bruce Bartlett says what you’re not supposed to say: Obama has governed as a moderate conservative, somewhat to the right of Richard Nixon. The frothing-at-the-mouth comments are an extra bonus.

And it is, of course, true; although Obama defenders would say that he had no option. Still, the point is that if you ask what Mitt Romney would probably be doing if he were in the White House and not trying desperately to convince his party that he shares its madness, it would look a lot like what Obama is doing.

There are, however, two crucial points to understand.

First, Obama gets no credit for his moderation, and never will. No matter how far right he moves, Republicans will move further right; and nothing he can do will keep them from denouncing him as a radical socialist.

Second, moderate conservatism isn’t working as a policy matter. As I’ve tried to tell everyone from the beginning of the Lesser Depression, a deeply depressed economy in which monetary policy is up against the zero lower bound turns the normal rules of policy upside down. We’re in a world in which conventional prudence is folly, in which playing it safe is extremely risky. And we have, alas, a conventionally prudent, play-it-safe president — the kind of president who might have done fine in the 1990s, but not now.

[-] 0 points by betuadollar (-313) 2 years ago

Nixon was a racist - wow - I have never thought of that. Oh well...

The reality is that Obama's progressive-mindedness has empowered people in ways that are not conducive to the continued existence of civil society - the anarchists are everywhere attempting to usurp the rights of the people, who incidentally, own the park.

If I had known that most American cities provide public property free to all those that want to pitch a tent, I would not have wasted so much on hotel rooms.

[-] 0 points by alouis (1511) from New York, NY 2 years ago

If I had known that most American cities provide public property free to all those that want to pitch a tent, I would not have wasted so much on hotel rooms.

now you know ;)

[-] 1 points by GinaLola (210) 3 years ago

I can only speak to federal employee pensions, but they pay into those themselves using interest bearing accounts. It's their money.I would think that the states would be on a similar system but maybe not.

[-] 1 points by bronxj (150) 3 years ago

Civilian federal employees hired before 1984 were covered by the Civil Service Retirement System (CSRS) and those hired after 1984 were covered by the Federal Employees Retirement System (FERS). Both plans had investible assets directed to the Civil Service Retirement and Disability Fund (CSRDF). This is a defined benefits retirement fund for retired Federal employees.This retirement benefit is structured as an annuity.

According to the Office of Personnel Management (OPM), they estimate the cost of the FERS annuity to be 12.5% of employee pay with the government (ie the taxpayer) paying the bulk (11.7%) of that contribution.

[-] 2 points by GinaLola (210) 3 years ago

Any idea about state's plans? Someone above wanted to know. Personally, I don't like to hear about any civil servants being slammed as a part of the Republican agenda. It is ridiculous to be talking about that when we are hemorrhaging billions per day out the back door trying to buy our friends, paying our enemies and supporting dictatorships and aristocracies around the world just to access their cheap labor markets and mineral rights.

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

You have to admit, it's a good strategy that the 1% used trying to turn private sector workers against their public sector counterparts. Notice it occurred right after the our economy started to collapse. Great way to divert people's attention away from the banks and wall street. And it almost worked, too.

Remember what great wall street banker Jay Gould said over 100 years ago: That he doesn't worry about the poor because he can get one half of the poor to kill the other half by using our differences against each other.

[-] 1 points by JonFromSLC (-107) from West Valley City, UT 3 years ago

This is part of the fraud, waste, and abuse argument. Which contributes billions a year to the deficit of the USA and of the states.

[-] 1 points by bronxj (150) 3 years ago

States , cities and towns seem to basically be in the same boat. In most states, the bulk of contributions toward pension plans come from municipalities and it is estimated that U.S. states face a total shortfall of at least $1 trillion in their funds for employees’ pensions and retirement benefits.

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

Pension liabilities are amortized over 30 years. Using an alarmist number like $1Trillion is a way opponents use to scare and mislead people. It's like saying, aren't you alarmed that you owe $200,000 on that mortgage you just took out on the house and you only have $5,000 in the bank? Or like saying, aren't you alarmed that the total unfunded liability of all mortgages is $25 trillion? Well...no, I'm not alarmed because people, groups of people, and pension funds will collect income over that 30 years to pay for their respective liabilities.

[-] 1 points by bronxj (150) 2 years ago

Apples to Oranges comparison because ( even not taking into account investment fluctuations ) unlike a traditional mortgage, additional liabilities keep entering the system with each wave of retirement and usually at much higher pension cost (based on highly increased salaries) than the previous wave. You have to remember in many cases we are not talking about people retiring at 62 with a pension based on a percentage of actual compensation (say x% of the actual amount earned for each year actually worked). We are talking about pensions given out as quickly as 20-25 years to people as young as 40 based on percentages (50% in NY) of the HIGHEST salaries earned over the course of the career PLUS overtime.

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

That is simply not true nationwide. While that may be true for cops in NYC (I remember seeing the ads in the subway), the average retirement age nationwide in a pension plan is over 60 and the average salary upon retirement is less than 50% of the highest 5 years, and you have to work at least 25 years to earn it. So even if start at 20 and work 25 years, generally you won't see a dime of pension until you are over 60. BTW - if you think benefits are too generous for cops in NYC, you should see what they get out in Nassau County.

[-] 1 points by bronxj (150) 2 years ago

I live in NYC so locally what effects me is NYC and state. That is solely what I am commenting on, although there are similiar arrangements in California.

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

Out in Cali they have something like 11 tiers of continually reduced pension benefits. They kept reducing over the years.

[-] 1 points by bronxj (150) 3 years ago

The real problem is that the side supposedly representing the taxpayers ( including those taxpayers who do not belong to public sector unions) bargain with our, not their own, money . The effects of these contracts and any related preferential legislation are so longstanding that those that are obligated to pay for them for decades to come should be given a voice through voter ratification by referendum. Unlike in the private sector; public sector unions negotiate with elected officials who make promises with other people’s money and who may be ”bought” by those same unions. For instance, in NYC a sanitation worker arrives at top salary of approximately $70,000 ( not including overtime or differentials) after only 5 years on the job and is eligible to collect a state and city tax free pension of 50% of the average of his 3 highest earning years (including overtime) after only 20 years on the job. Many of these guys fully retire at 40 on an after tax pension which is more than they made while they worked. As the taxpayer is on the hook to cover these costs for the life of the worker, shouldn’t the taxpayer have had a say in the negotiations through a voter ratification of contracts and pensions? Just as the union has its members vote to ratify a contract, the public should be given the same opportunity.

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

We live in a Republic. As long as we do, we will have to elect representatives to make decisions like this. That is how you have your say in this Republic; by voting for a representative who represents your concerns. The unions also elect their representatives; and trust me, sometimes the union's representatives are just as upset at their representatives as you are of your. Both the public's representatives and the union's representatives negotiate an employment contract (usually around 3 years) which includes wages, working conditions, retirement... However, it sounds like you want something more akin to direct democracy where all the taxpayers sit at the table with all the union members and iron out a deal, like what is current happening at the GAs?

[-] 1 points by bronxj (150) 2 years ago

that’s where I have a problem. I am actually a supporter of unions in the private sector because both groups negotiating have some skin in the game. The workers and management. But in public sector negotiations, the side that is supposedly negotiating for the taxpayer is not playing with his money, but the taxpayers and is subject to being “bought”. In any union negotiation, public or private, the contract negotiated by the union is voted on by the actual members of the union. What’s wrong with these contraxts (and any preferential legislation) being subject to ratification by the residents of the municipality through voter referendum, giving them some voice in the process?

[-] 2 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

A referendum is certainly one way it could be done.

[-] 0 points by alouis (1511) from New York, NY 3 years ago

Thing is you promise someone a pension it's wrong to deny it after he's given you twenty or thirty years. No? Tax the rich. What is OWS about if not that?

[-] 1 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

It's not only wrong; it's illegal.

[-] 1 points by bronxj (150) 3 years ago

I thought a central theme (if there is one) is the elimination of preferential legislation as a way of leveling the playing field (eg if you don't bail out joe the butcher for $50,000 if he goes under, you shouldn't bail out AIG for billions)

[-] 0 points by alouis (1511) from New York, NY 3 years ago

Dude you take a job at sanitation for example. You are paid in part up front in in part when you get old. You are promised this! This is not a bailout. It's payment for services rendered. Payment as promised.

[-] 1 points by bronxj (150) 3 years ago

Never said it was a bailout. just said that the general population never ratified the contract or the tax free status of the pension and, if the union members are given the opportunity to vote on the contract and influence legislation, shouldn't the counterparty to the agreement be given the same right? If not, why not?

[-] 0 points by alouis (1511) from New York, NY 3 years ago

For better or worse these contracts are signed by your legal representative government. If we have to pay the banksters why not the teachers and sanitation men? What's so wrong with workers living well and rich people paying taxes?

[-] 2 points by StevenRoyal (490) from Dania Beach, FL 2 years ago

See my post above. It sounds like he would prefer more direct democracy of the sort that is occurring at the GAs. He would like all the taxpayers and all the union members to be sitting at the collective bargaining table.

[-] 1 points by bronxj (150) 3 years ago

"For better or worse these contracts are signed by your legal representative government." the same could be said, in one matter or another, of every matter people on this board are protesting.

[-] 0 points by alouis (1511) from New York, NY 2 years ago

It's really very sad that working people believe that other working people should be cheated by the government out of their promised pensions. I have no more to add. This is sad.

[-] 0 points by JonFromSLC (-107) from West Valley City, UT 3 years ago

good response. thumbs up!