How Wall Street Bought the Public Employee Unions
Earlier this week, on December 7th, 2011, as reported by the San Jose Mercury, the “San Jose City Council votes 6-5 to place pension reform on June ballot.”
This plan is drawing fierce resistance, but there are two financial considerations that most critics of pension reform don’t take sufficiently into account when making their arguments:
(1) Pension contributions are very sensitive to how much the fund can earn. A pension that earns 3% per year, i.e., allows someone who works for 30 years to retire with a pension equivalent to 90% of their final salary, will require a 10% increase in annual required contributions (as a percent of pay) for every 1.0% the earnings on the pension fund drop. That is, if the contribution to a firefighter’s pension is currently 35% per year (based on employer and employee contributions combined), and CalPERS lowers their expected rate of annual return by just 1.0%, from 7.75% to 6.75%, then the required annual contribution as a percent of salary goes up to 45% per year.
(2) The rate of return being currently maintained by most pension funds, 7.75% per year, is much higher than can be sustained going forward. A key reason for this is because equity growth over the past 20-30 years, and especially over the last 10-15 years, was fueled by increasing debt. By enabling massive borrowing – consumer, commercial and government – more consumer spending was in-turn enabled, which increased corporate profits which increased equity values. Now global debt has reached its maximum, we are going to deal with slower growth and hence lower rates of return for pension funds. The other key reason for the inevitability of lower pension fund returns is demographic. With baby-boomers now beginning to retire, and with public sector workers now retiring with these far more generous pension plans (they were only raised about 10 years ago), there are more people selling equities than ever before in order to finance retirements. Equity values are a function of supply and demand, and public sector pensions are going to be doing a lot more selling to finance pension payouts than ever before. The chances that the major pension funds in the United States can continue to earn 7.75% year after year are virtually zero.
Pension reforms such as San Jose Mayor Chuck Reed’s proposal should be supported.
The San Jose proposal may actually do enough to restore financial solvency to a public employee pension plan. Eventually raising the employee’s withholding to as much as 25% of their pay begins to contribute enough money to fund these plans, especially when combined with accruing benefits at no more than 2.0% per year, and deferring retirement to age 57 or higher.
Here are a few questions and answers about public sector pensions:
QUESTION: Aren’t pension critics, or “reformers,” if you will, trying to ignore the contractual commitments they made as taxpayers, simply because they become more costly than originally expected?
ANSWER: Nobody “agreed” to these contracts as they have turned out. When pension upgrades were sold to politicians by Wall Street lobbyists they were represented as being nearly free to taxpayers because market based returns would cover the costs. Politicians didn’t understand the financial risks and voters were never told about it. To be fair, even the union leadership had no idea what they were getting themselves into.
Let’s put it this way – if somebody sold you a car, and said the payments would be $250 per month, then five years later said the payments would be raised to $1,000 per month, then five years after that said the payments would be raised to $2,500 per month, would anyone “like” that? And how would the holder of the loan appear – when they say “a deal is a deal” and try to force you to pay up?
In any event, opponents of pension reform should review the two financial points made earlier, because bankruptcy will void these contracts, and bankruptcy is staring every city and county in California in the face.
QUESTION: Everyone agrees that some kind of public pension reform is unavoidable, and that is exactly what is underway now. But can people who want to change public sector pension benefits legitimately claim that Chapter 9 is a magic bullet that will suddenly relieve everyone of the legal obligations that have been made on their behalf by their elected representatives?
Now that the bill for pension obligations is coming due, wouldn’t reneging on these obligations constitute theft?
ANSWER: “Theft” is how public sector unions have stolen our democracy and “negotiated” these unsustainable pensions with politicians they elected. Public sector pensions, on average, are five to ten times better than social security. The arcane and onerous details of pension obligations were buried in the fine print of these “contracts.” To imply that taxpayers are somehow the thieves for wanting to reduce pension costs down to the levels they were originally ignores the sheer scale and generousity of these financially unsustainable pensions. The 2010 annual reports from CalPERS and CalSTRS document that the average pension for a newly retired government worker in California after 30 years of work is nearly $70,000 per year. If every Californian over the age of 55 received that much in retirement it would cost $700 billion per year, nearly 40% of the entire GDP of the state! It’s impossible. It can’t go on. It is oppression and a recipe for economic ruin.
The bottom line is this – public sector unions and Wall Street are now in bed together, betting trillions of dollars in the markets with their pension funds, trying to eke over-market returns through aggressive fund management, with the taxpayers forced to pay up when they can’t hit their numbers.
From the CalSTRS Annual Report, page 135:
CalSTRS participants who retired during the 12 months ending June 30th, 2010 (the most recent data), earned pensions as follows:
25-30 years service, average pension $50,772 per year.
30-35 years service, average pension $67,980 per year.
35-40 years service, average pension $86,736 per year.
From the CalPERS Annual Report, page 151:
CalPERS participants who retired during the 12 months ending December 31st, 2009 (the most recent data), earned pensions as follows:
25-30 years service, average pension $53,182 per year.
30+ years service, average pension $66,828 per year.
QUESTION: Isn’t it true that the longer someone works in any pension system, the higher their eventual benefit is likely to be? Doesn’t it work that way with Social Security, up to the cap?
ANSWER: The social security cap is about $31K per year after 40+ years of full time work, which equates to well less than 20% of the payee’s annual income. There is no cap on public sector pension payments, which are averaging nearly $70K per year, and they are averaging over 66% of the payee’s annual income, after only 30+ years of work.
Nearly everyone in America was purchasing more than they could afford during the internet/housing bubbles, but lobbyists hired by public sector unions, alongside lobbyists hired by Wall Street, are trying to make our politicians enshrine the pension liabilities – sold by Wall Street lobbyists to union-backed politicians – permanently into our tax code. And together, Wall Street and public sector unions have made public sector agencies collection agents for Wall Street. Wall Street hedge funds now bypass brokerages to manipulate market liquidity and asset values, and public sector pension funds are the biggest players on Wall Street. This is a corrupt system and cannot be fixed until taxpayer backed pension funds that can extract by “contract” 7.75% returns – either from investment returns or from taxpayers – are dissolved. And why shouldn’t public sector pension funds be the biggest players on Wall Street? Not only do they control about $4.0 trillion in assets, but they have the full backing of the public sector unions, the politicians they control throughout America’s states, cities and counties, and the taxpayers as the final guarantors.
Public sector pension funds and the social security fund should be all merged into a single fund, and the combined assets should be systematically moved into either cash or treasury bills, eliminating the speculators, eliminating most of the expensive financial bureaucrats of all stripes, and getting the government and Wall Street out of the business of fleecing taxpayers. And one, uniform and financially sustainable retirement incentive formula would be offered to ALL retired American workers, public or private.
For much more on the benefits and the feasibility of merging all public employee pension funds with social security, read “Merge Social Security and Public Pension Funds.”
Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
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Sorry, Ed. Posting the same unfounded argument repeatedly doesn’t give it any more credence. Paraphrasing our own courts, although you may see the public pension systems as imprudent commitments by our elected representatives, that in no way makes them immoral, illegal, or unconstitutional.
Sorry, Ed. Posting the same unfounded argument repeatedly doesn’t give it any more credence.
Skippy, can you please tell us how this is an “unfounded argument” when it comes from the horses mouth??? It was out of their OWN REPORTS;
From the CalSTRS Annual Report, page 135:
CalSTRS participants who retired during the 12 months ending June 30th, 2010 (the most recent data), earned pensions as follows:
25-30 years service, average pension $50,772 per year.
30-35 years service, average pension $67,980 per year.
35-40 years service, average pension $86,736 per year.
From the CalPERS Annual Report, page 151:
CalPERS participants who retired during the 12 months ending December 31st, 2009 (the most recent data), earned pensions as follows:
25-30 years service, average pension $53,182 per year.
30+ years service, average pension $66,828 per year.
Those areb? average pensions for full career employees-if you can even call 30 years a “full career”.
(BTW-I had been posting this info verbatim over at OCR for a long time, hopefully Ed lifted this from my previous comments)
Sorry Rex. Ed’s claims today are as follows: Nobody ever agreed to pay public employee pension benefits; it’s not theft to take something for which you are legally obligated if you can change the focus to how low level public employees have “stolen our democracy” and, since Social Security doesn’t provide the same benefit as a real pension, the real pensions should just be seized and folded into Social Security.
None of those foolish pieces of propaganda are correct, Ed keeps repeating them here and elsewhere (as do you, Rex), and using information from the CalPERS and CalSTRS Annual Reports doesn’t do a thing to change the basic premise of Ed’s argument.
Nothing more than right-wing sophistry disguised as rational discussion.
SkippingDog – it is interesting how you are oblivious to virtually anything that doesn’t support your position, and fixated on accusing anything remotely critical of public sector unions as being “right-wing sophistry.” Nobody who knows me would ever claim I am “right wing,” SkippingDog. I am an independent voter and am personally acquainted with nearly as many Democrats as Republicans who have had it with public sector unions. Let’s recap:
1 – Public employee unions spend at least $250 million per year, just in California, to buy our state and local politicians:
https://civicfinance.org/2010/08/10/public-unions-political-spending/
2 – Public sector employees, on average, make 50% more in base pay and 100% more in total compensation than private sector employees:
https://civicfinance.org/2010/10/24/public-employee-compensation/
3 – About 80% of all state and local government expenditures in California are for personnel costs:
https://civicfinance.org/2011/02/17/how-much-of-california%E2%80%99s-state-and-local-budgets-are-personnel-costs/
4 – Public employee union spokespersons grossly understate the average pension awards:
https://civicfinance.org/2011/05/31/government-worker-understates-average-pension/
5 – Public sector unions exercise nearly absolute power over the political process in California:
https://civicfinance.org/2011/09/09/special-interests-vs-fiscal-reform/
and
https://civicfinance.org/2011/07/13/proposed-california-state-laws-to-protect-special-interests/
6 – Corporate political spending is split roughly equally between Republicans and Democrats, but union political spending is 95% to Democrats:
https://civicfinance.org/2011/04/06/which-special-interests-are-partisan/
7 – Public sector unions are in a partnership with some of the worst elements of Wall Street – through their pension funds they extract 7.75% annual interest out of an economy and investment market that has been stagnant for over a decade – forcing taxpayers to cover the difference:
https://civicfinance.org/2011/11/01/government-pensions-increasing-hedge-fund-investing/
and
https://civicfinance.org/2010/07/08/the-axis-of-wall-street-and-unions/
8 – Social security can be made financially solvent with minor adjustments to withholding and benefits, but public sector pensions are insolvent and will destroy the U.S. economy and financial system if they are not severely modified:
https://civicfinance.org/2010/05/22/funding-social-security-vs-public-pensions/
In my opinion, SkippingDog, there is no greater threat to our democracy, our freedom, and our nation’s economic health than public sector unions. You can hide behind contracts, signed behind closed doors by politicians who were bought by your unions, but your moral standing is nil. What public sector unions have done to America is tragic, and must be reversed.
In my opinion, SkippingDog, there is no greater threat to our democracy, our freedom, and our nation’s economic health than public sector unions.
Public unions are by far the biggest threat to the poor and middle class, not really the rich so much (of which, many of the public employees now are in that class top3%-10% in income).
The taxes used to fund the $3-$10 million cop and FF pensions are usually a sales tax, which is by far the most regressive tax in America, always has been and always will be. I HATE the sales tax, but that is what raises the most money, at the expense of the poor. That is why it is the center piece of JB’s tax hikes. It is always the same story, oh these taxes are;
1) small (1/4-1%),
2) it is for a “good cause” [education cops ff etc]
3) and it is “temporary” like the 1/2 cents sales tax increase passed to fix the Loma Prieta earthquake in 1989-still here as a tax 23 years later, to fund law enforcement.
Sorry Skippy, you have your rose colored glasses on still.
Ed. Using self-referential citations that are questionable in the first place – you still double counted state and local employees in your August posting by adding two separate reports together – and your suggestion that public employees have $250 million to spend on local politics in California each year is far beyond ridiculous.
According to the FPPC, $250 million was spent by ALL organizations on lobbying in the State of California, and AT&T spent more on lobbying than the California Teachers Assn., the largest public employee union in the country. CTA spent a little more than $38 million total, so you’d have a hard time getting to $50 million for lobbying expenses by all government employee groups in total.
That’s the kind of misinformation you routinely pass out here, so there’s no reason to believe anything else you post has anything other than a political agenda that is clearly anti-labor and virulently anti-public employee.
Just to give your readers some of the real numbers involved, I’ve attached the FPPC report for 2010. Take a look at pages 5 and 6 if you don’t have the time or inclination to read the entire report.
http://www.fppc.ca.gov/reports/Report31110.pdf
BTW, Ed, here’s a quote from the FPPC Executive Summary:
“This report, “Big Money Talks,” examines California’s Top 15 spending special inter- est groups over the last ten years. Their combined expenditures totaled more than $1 billion.
Of the 15 identified groups, six are corporations, three are Indian tribes, two are labor unions and four are business associations.”
Let’s see….2 labor groups trying to effectively represent the interests of their members in competition with 6 corporations, 3 Indian Tribes, and 4 business associations (which are really double representing the corporate interests).
It takes both gall and a willful disregard of facts to suggest that labor unions, public or private, are running our state.
SkippingDog – Did we read the same report? Here, from page ten, are the #1 and #2 special interests in the state of California, both far ahead of anyone else:
1. California Teachers Association $ 211,849,298
2. California State Council of Service Employees $ 107,467,272
You should also consider this: The public employee unions have one goal – more pay and benefits for their members, and more members. There is no corporate opposition to this.
You are also apparently assuming I am endorsing the massive corporate spending. I don’t. I think you and I would probably agree on the need to also restrict corporate spending. Any ideas?
Where we disagree, I think, is that you believe that public sector union political spending is somehow necessary to counter the corporate spending. It does nothing of the sort. The corporations spend money in politics to pursue their agenda – more business friendly regulations and the like, and the public sector unions spend money in politics to pursue theirs – more pay and benefits for government workers, and more government workers. These agendas are not in opposition. In my opinion the agenda of the largest corporations and the public sector unions have as much in common with each other than with the interests of the average private sector worker and taxpayer.
I stand by my comment that public sector unions are running California. They have had their way in nearly every city and county, as well as in the State Legislature, for years. Do they wield absolute power? Of course not. But they are by far the most powerful special interest in California, and I think it has done us nothing but harm – unless you happen to work for the government, in which case it has been great.
Finally, if you bother to read the posts I reference – yes, I wrote them – you will see that I draw from raw data. The annual reports from CalPERS and CalSTRS are an example. Elsewhere I draw from U.S. Census data, Bureau of Labor Statistics data, the California Employment Development Dept., and the State Finance Office. If you think my estimates and calculations are inaccurate, I would like to know which ones.
“Public sector pension funds and the social security fund should be all merged into a single fund, and the combined assets should be systematically moved into either cash or treasury bills, eliminating the speculators, eliminating most of the expensive financial bureaucrats of all stripes, and getting the government and Wall Street out of the business of fleecing taxpayers. And one, uniform and financially sustainable retirement incentive formula would be offered to ALL retired American workers, public or private.”
This… coming from someone who has zilch saved for retirement.
Of course you would want to merge plans, Ed.
You have no credibility here, Ed. Start saving, then you can talk.
Oz – you tempt me to reveal the details of my personal financial situation, because apparently, you don’t think anyone who has an opinion on this matter has any credibility unless they can prove they have personally saved sufficient retirement assets to become indifferent to the plight of everyone else. Is that what you’re trying to say?
In my opinion, the government should offer one taxpayer funded retirement formula to all citizens. It should be financially sustainable and should be enough so people can afford to keep their assets if they’ve paid them off. It should provide a basic safety net to retired people and nothing more. If some government jobs are truly deserving of higher compensation, that should be reflected through higher base pay, not in super-retirement benefits. This way all Americans would share equally in the challenge of preparing for their retirements. I think we have made a terrible mistake by splitting America into two populations, those who do NOT have to prepare for retirement (government workers), and the rest of us.
From an economic standpoint, we have enabled the formation of nearly $4.0 trillion in public employee pension funds that are empowered to extract a 7.75% return on those assets by two means – either through investment returns, or through higher taxes. I’m convinced this distorts our markets by eliminating the inherent risk that is supposed to underlie investment decisions when the fund managers aren’t required to rely solely on investment returns to fulfill their payout obligations.
Ed,
In response to your first paragraph– You have already revealed you financial situation. I am not tempting you. I want you to start saving money.
Although you twist my words, I will answer your question.
“YES!” Your solution of merging assets would be a lot more credible coming from someone who had actually managed to save a few dollars for retirement. Here is why:
You seem insistent on comparing SS and pensions. This is flawed thinking. SS, as you know, is Old Age Survivors and Disability Insurance. A pension/retirement account, whether DB or DC, is deferred compensation.
Parts of California are the rare exception whereby people with pensions do not have to pay into SS, because the feds granted waivers since the pension system surpasses SS (for now). That still does not change the system… the pension is still deferred compensation, not an Insurance/disability policy.
So yes, when we are talking about actually merging assets (your solution), I would much prefer talking to someone who also had been wise enough to save up a portion of his/her compensation in a tax-deferred retirement account– be it a pension/ IRA/ 401k/ TDA/ anything. You, for whatever reason, have none of the above.
You are the grasshopper coming to the ant in the winter.
Yes, Ed, your argument lacks credibility.
Start saving, Ed.
Oz – my financial situation is irrelevant, and I have not revealed nearly enough of my financial situation for you to make any assumptions regarding my net worth. Even if I were as destitute as you allege, for you to say that makes the logic of my arguments suspect would be as unfounded as for me to suggest your arguments lack integrity because you have a pension. My individual situation, like yours, amounts to – as they say – nothing more than a hill of beans. To dwell on this is a subset of the “attack the person, not their arguments or facts” tactic. It is a waste of time. What matters is what will make us better off as a nation; what is fair; what is financially sustainable.
Let’s suppose I had $1.0 million to invest, and let’s say I wanted to retire at age 55. A healthy 55 year old has a life expectancy of 25 years. Here’s how much a declining balance annuity would provide per year at various rates of return:
5.0% = $71K
4.0% = $64K
3.0% = $57K
2.0% = $51K
If you make it to age 85, retiring at age 55, here’s how much a $1.0M declining balance annuity would provide per year at various rates of return:
5.0% = $65K
4.0% = $57K
3.0% = $51K
2.0% = $44K
The first thing to remember about these calculations is that in order to assess how much retirement security $1.0M in savings really represents, you either have to assume these are after-inflation rates of return, or you have to assume there is NO cost-of-living adjustment built into them – which of course there isn’t in an individual retirement account. As you know, most public sector defined benefit plans have a COLA capped in the low single digits until the value of the pension drops to 80% of the purchasing power it held in the year of retirement, wherein the cap is lifted and the COLA rides at the rate of inflation thereafter. This is an advantage that no reasonable amount of savings by an individual can possibly hedge against.
Your point about these pensions being “deferred compensation” is valid – that is the premise under which most of them were negotiated. But the amount of compensation that was being deferred in the form of pension contributions was based on overly optimistic projected rates of return on investment. In short, the politicians who sweetened the pension benefits in return for less wage increases were conned. And the public never knew any of this was going on. This occurred behind the voters backs.
In California, moreover, during the period when supposedly compensation increases were being reduced in exchange for increasing the pension benefits by over 50% (2.0% per year to 3.0% per year for safety with retirement eligibility advanced from age 55 to age 50), nonetheless, firefighter salaries increased between 2000 and 2010 at a rate 30% greater than inflation. You can find all these calculations as well as the raw U.S. census data on safety personnel salaries in the post https://civicfinance.org/2011/10/14/public-safety-compensation-trends-2000-2010/
So history has proven incorrect the idea that public employees were exchanging lower salaries for better pensions. Public employee salaries have matched or exceeded the rate of inflation over the past decade, at the same time as their already excellent pension benefits were improved by over 50%.
Let’s assume that public sector pension funds will earn 4.75% after inflation for the next 10-20 years, which is what they project. For someone to retire at age 55, and live 25 more years with salary equivalent to 90% of their final year’s pay, even at that very optimistic 4.75% real rate of return, they would have to amass $1.2 million in invested capital. Are you saying you could have done that? Could I do that? If they retire at age 55 and live 25 more years with salary equivalent to 60% of their final year’s pay, even at that very optimistic 4.75% real rate of return, they would have to amass $800K in invested capital. Could I do that? Could you?
More importantly, do you really think every American can do that? Because government workers ALL do that. They do it just by showing up. And if those rates of return drop below 4.75% per year (after inflation, i.e., if they drop below 7.75% per year), the taxpayer makes up the difference. This is wrong.
Ed-
I am aware of the problems with ad hominem type arguments, and would join with you in tabooing them in a discussion if it were only on raw numbers. Thus, as for the first part of your post, we’ll leave it alone for now. Where credibility problems come up is your “proposed solution.”
If we are speaking philosophically, I share Professor Doug Walton’s opinion that, “ad hominem reasoning is not always fallacious, and that in some instances, questions of personal conduct, character, motives, etc., are legitimate and relevant to the issue, as when it directly involves hypocrisy, or actions contradicting the subject’s words.”
Let’s put it in laymen’s terms, though. You have zero street credibility.
Somehow, whether forced or not, anyone with a pension/401k/match/IRA/etc. has managed to defer some compensation in a tax sheltered account and save for a rainy day. You have not.
The government provides tax favored status to all of them to encourage saving.
You chose and keep choosing to ignore it.
And now you want to blog about a solution of “merging assets”?
Come on, Ed.
As far as your real numbers, if it’ll keep you from whining, consider this.
Someone saving the $16,500 in a regular old 401k will hit 800k in 20 years at 4% Real Return. That’s with no match. As a self-employee, you, Ed, are eligible to put in more than twice that…hmmm… and you’re still whining. (Note also that due to the structure of a pension plan, the sums you are talking are not actually necessary. Many folks leave early, and yet, the employer contributions stay in the system)
Throw in a 5% match and its over 1 million at 20 years.
Throw in a 10% match and its over 1.2 million at 20 years.
Wait till 25 years and its just shy of 2 million.
Let’s get on the ball here, Ed. Start saving.
Someone saving the $16,500 in a regular old 401k will hit 800k in 20 years at 4% Real Return. That’s with no match.
Well Baby Einstein, considering the MEDIAN income in CA is $31K, for those actually with a job, and after deductions of 35% in payroll and income taxes you would have a grand total of $20K, and your proposal is to put 83% of that amount into a 401K-leaving $3500 to live on for an entire year, brilliant thinking. I am sure there are millions of people in CA livig on $3,500 per year!!!!!!!!!!!!!!!!!!!! That for your seemingly math challenged brain is $291 a month, which would not cover 20% of basic necessities.
Your comment is as ridculous as the rest of the nonsense you spew here, 100% bogus talking points.
$16.5K!!!!!!!!!!!! Hehehehe…funny, you should be in stand up.
Throw in a 5% match and its over 1 million at 20 years.
Throw in a 10% match and its over 1.2 million at 20 years.
NO ONE offers a 5% match today, not even 3%, and no one EVER offered a 10% match. You are a clown, relaly, the comments you post are so bogus it is laughable. I guess you may actually believe this garbage though.
Rex-
Do you actually work?
Here’s ~20,000 employees that disprove you.
http://www.businessweek.com/careers/bplc/2007/52.htm
The company still offers this, too.
Thanks for wasting our time.
The highest match I have heard of at a large company is 14%.
The highest I have heard of at a small business like Ed is running is 100% up to the legal limit (Get the picture, Ed?)
Start saving and stop complaining, Ed. (You too, Rex).
Here’s ~20,000 employees that disprove you.
LOL…an anecdotal fluke of 20K in a sea of a few hundred million workers……please Oz, you make this too easy.
Rex-
Another refusal to admit you were wrong, Mr. Time Waster.
“NO ONE EVER…” Please!
To use your own words, “You are a clown, really, the comments you post are so bogus it is laughable.”
Your hyperbole and falsehoods are a massive waste of time.
I really have no idea why Ed lets you post here, instead of removing your posts with the other spammers.
I’m through responding to your useless drivel, unless you are willing to help me with the task at hand… Getting Ed to save.
Rex, here’s my offer and rationale:
Since, for some unknown reason, Ed actually allows you to post your nonsense, he must like you (???)
Since, you apparently believe in Ed’s cause, I think. (If you even have a cause beyond vexing everyone).
Since, therefore, if you want to help him and his cause, you will want to help make him a credible thinker.
Then, you, Rex, convince Ed that if he is going to blog and preach about sustainable civil financing he needs to get his own finances to a point of sustainability and save some money.
Anything else is hypocrisy.
I look forward to working with you, Rex.
I don’t suffer fools lightly Oz, and I should probably ignore your joke comments, but I am going to respond since you seem to have a lack of ability to perform critical thinking on your own, a skill you need so bad but lack in spades;
#1) You said, and I quote “Someone saving the $16,500 in a regular old 401k will hit 800k in 20 years at 4% Real Return. That’s with no match.” The notion that the average CA employee who earns $31K per year BEFORE taxes could save $16.5K is one of the dumbest comments I have ever seen posted here. That amount would be nearly their entire take home salary. But I guess you and your pea sized brain think you can pull that kind of “fuzzy math” over on intelligent people. Wrong lil buddy. $16.5K!!!!!!!!!!!!!!!!!!!! Too funny.
#2) The fact is 41% of the employees in this state work at or near minimum wage with no benefits- and make less than that $16.5K in take home pay to ever start with-41% Baby Einstein. But I am sure you have some ridiculous comment that they too can have a multi million dollar gov type pension at age 50, if they only saved XXXX amount of dollars at 4% per year-what were they thinking? The average gov employee is receiving over $100K when salary and benefits are included, for the so called “public safety” employees it is $200K, over $250K with OT, and these are jobs that only require a HS diploma or GED. There are nurses in thsi state that are reeiving over $250K per year in comp with their OT factored in, some of $350K.
#3) Then you post that idiot comment that you can get a 10% match and link to ONE COMPANY in a link that is 5 years old, not even current.
Look, if you want me to spank you here with the truth, the facts, not some anecdotal 5 year old article, I will be happy to-all day long.
You’re obviously some public employee trough feeder who believes in the “entitlement mentality”.
The highest match I have heard of at a large company is 14%.
The highest I have heard of at a small business like Ed is running
is 100% up to the legal limit (Get the picture, Ed?)
More fantasy talk from the parrrot. Post up the links buddy-and try to find one that says December 2011, not 2007 like you did earlier. Oh, and make sure the match covers ALL employees, rank and file, not just a handful of senior managers.
Rex-
BAH still throws 10% in today EVEN if their employees throw in nothing.
The tiniest bit of research would show you that many companies including BAH still throw in large matches, some of them obscenely large.
http://money.usnews.com/money/blogs/planning-to-retire/2009/03/30/the-30-companies-with-the-best-401k-matches
But, that’s okay, just go on making excuses why you can’t save any money.
Even Ed in all his glory claimed the private sector worker was at least making in the 40’s. (By the way, an employee making 31k would pay essentially no tax, not 15k as you erroneously suggest). All of your glorious unsubstantiated hyperbole again shows what a time waster you are.
So, again, let’s move on.
You and I are one of a very few of Ed’s actual readers. How about my offer? Come on, Rex, your chance to make a difference. Let’s get Ed to save. No more excuses. No more time wasting.
P.S. Why would you be concerned about what a private sector nurse makes?
It’s unfortunate that those opposing pension reform almost always resort to personal attacks on those making the proposals – they do it because the facts do not support their case.
If they ran a company would they pay their employees more than they make AND give their employees a pension five times as good as they get as an owner? I think not, but that is exactly what’s going on with the public pension plans and most taxpayers in California.
OBN-
Ed’s talk of “merging assets” is NOT the same as pension reform.
Nor is talk of Ed’s credibility and motivation the same as a personal attack.
Ed’s a big boy: he can handle some of us wondering about his motives.
Rex and I are trying to help Ed out, you should too.
R/
Oz
Rex-
BAH still throws 10% in today EVEN if their employees throw in nothing.
The tiniest bit of research would show you that many companies including BAH still throw in large matches, some of them obscenely large.
http://money.usnews.com/money/blogs/planning-to-retire/2009/03/30/the-30-companies-with-the-best-401k-matches
But, that’s okay, just go on
2009-3 years old, and once again, the top companies in the nation and even then not rank and file….BTW-I guess you failed ot read the entire article;
Note: The company match includes profit sharing and company stock contributions and is weighted according to expected forfeitures based on the plan sponsor’s vesting schedule and employee turnover.
It’s unfortunate that those opposing pension reform almost always resort to personal attacks on those making the proposals – they do it because the facts do not support their case.
Old Boy, that’s all Oz and Co have-spin and deflection.
California’s Public Employees Earn $102,000 Per Year on Average Compared to $57,000 by Those of Us Whose Taxes Sustain Them
https://civicfinance.org/2010/10/24/public-employee-compensation/
Rex-
Top companies???
Stressed out that the WalMart workers are saving, and you’re not?
Despite your best chance to continue to make excuses, these are rank and file numbers by the way. You also know that just like the public sector, participation numbers are frequently a couple yrs behind, so stop throwing out that lame excuse. You should have been saving 1,2, 5, and 10 years ago and you weren’t, so now is no time to whine, but instead to catch up only $2000/yr at age 20 at 4% RR is $300k at age 55.
at age 65 it’s $600k
You’re starting to come around some, Rex. There might be hope. You’re at least citing Ed’s articles instead of the previous stuff you pulled out of thin air. I can work with that.
Let’s get on the ball and help Ed jumpstart his savings.
Help me out.
Thanks.
I firmly don’t believe everyone deserves the same retirement. Police and Fire deserve more due to the documented stress associated with the job. Also, low life expectancy for both usually sends the pensions payouts back into the pension fund anyway. The retirement benefit of a valued pension is what motivates many law officers not to break rules or risk getting fired and loosing the hard earned pension. With all the new talk of reducing pensions and or doing away with them most police and fire employees will just move to what ever city or state has the best plans. Since most have lost families due to bad work hours and other negative work problems nothing would prevent this movement. I have over 25 years vested in my career and I continue to give to my city every day. I have been told over and over for 25years that my pension would be there to get me through the retirement days. Now every day I hear that all those years were worthless in eyes of public. For the last 20 or so years I have been telling my two older brothers who are both in private sector that they need to take out out 7% of each of their pay checks and put it away for retirement. Instead they decided to spend it all on stuff that they didn’t need like most people in private sector do. Well thankfully my employer took 9% from each paycheck plus other stuff to make sure I would have what I needed when I retire. So all this time I suffered and lived a meek lifestyle while my brothers always had extra cash available. I have been told over the past few years that I was pension poor, meaning that I was putting away more than I should and would be better off retiring. Now they see that I have a excellent retirement coming in the near future and they are pissed just like the rest of the private sector. So now everyone thinks they are owed a retirement even though they didn’t pay for one. Well I have paid for mine and if this country makes too many drastic changes it will fall. The protectors and life savors will not function and the cities will fall. It’s already being talked about in local areas.
With all that being said there are solutions that will benefit everyone and they are so very simple. First step social security is not being used correctly. My dad only gets 1500 a month after working his whole life [talk about not fair]…
Now at each state run its retirement system without federal involvement. Each state will accept applications from a new group of vendors (look job creation). These vendors will be investment companies or similar to. Each state will narrow it down to 6 companies then set some standards. After that hold a state election to chose the 3 best companies. Now everyone who works in that state will contribute 6-9 % of each paycheck to one of the 3 companies of their choice. Those companies will control the money with a state oversight. Every 3 years the companies are up for reelection. If voted out the entire value is transferred to the new elected company. There are many other options available.
Fiveo
February 7, 2012 at 3:33 am
I firmly don’t believe everyone deserves the same retirement. Police and Fire deserve more due to the documented stress associated with the job. Also, low life expectancy for both usually sends the pensions payouts back into the pension fund anyway.
How many times do you clowns think no one will call you on these phoney baloney lies???????????????????????????? Cops and FF’s do NOT have dangerous jobs, they are not stressful and they live LONGER than the average person, yet here you are making the old bogus claim that the die sooner and have a stressful job-PLEASE! (oh and we won’t even go into the fact that the spouse gets the pension even if the cop/FF did die so NOTHING “goes back” to anywhere).
For the last 20 or so years I have been telling my two older brothers who are both in private sector that they need to take out out 7% of each of their pay checks and put it away for retirement. Instead they decided to spend it all on stuff that they didn’t need like most people in private sector do
Oh, here we go with more whoppers, how EVERYONE in the real world spends their money foolishly while the GED educated cops and firewhiner (who are making more with a GED than medical doctors with 15 years of college) are saving!!! Please.
Now they see that I have a excellent retirement coming in the near future and they are pissed just like the rest of the private sector
If you have an “excellent retirement” it is b/c you were gifted millions in retroactive pension increases which you neither worked for nor earned. In fact the majority of the trough feeders do not even contribute to THEIR side of the pension funding, it is “picked up” by the taxpayers.
So now everyone thinks they are owed a retirement even though they didn’t pay for one.
You are obviously speaking of public employees who have a “entitlement” mentality.
I am happy as a clam at high tide I don’t have to go through all these numbers. I get my $90,000 per year with fully paid medical insurance on top of it it and will remain in stealth mode.