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Letters to the Editor

KPERS concern

March 2, 2010

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To the editor:

The Republican-controlled Kansas Legislature is always paying lip service to their fiscal prowess and responsibility. Granted, they are outstanding in their ability to withhold even modest pay raises, let alone cost-of-living allowances to the state employees, whom they love to flog whenever they think it is politically expedient. But where does their responsibility lie when we discover that they have not been properly funding state employees’ retirement funds? Thousands of people who have served the people of Kansas faithfully only to find out that what the state of Kansas promised in exchange for their years of service isn’t worth the paper it’s written on.

Indeed, what is the matter with Kansas when Kansans continually elect such miscreants?

Comments

energy03 4 years, 1 month ago

As a former State employee, I can tell you all that the only persons concerned about ANYTHING are the actual workers, not the elected officials. I have to wonder why we are always caught off guard when it is disclosed that the money invested by the working class has not been invested wisely or matched as promised. I'm glad I am no longer a part of that self serving, politically motivated machine in Topeka. We as American citizens have bought into the brain washing campaigns sold by our government and the media. What do people really think is going to happen should you have not invested in these retirement schemes? Do you really believe you will be living under the bridge, starving to death in your elderly years? That's what "they" want you to believe so you will continue to finance in their futures. (KPERS being a better plan than many states isn't something to brag about) We need to take charge of our selfs and quit "banking" on others to do it for us.

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kugrad 4 years, 1 month ago

  • If you think you will make more money from investing your 4.5% than you will getting a matching 4.5% plus a defined benefit, then you certainly have no business investing your money in the stock market or anywhere else as there is no way you understand finance.

  • The problem with KPERS is not the economy. The problem is that the legislature keeps borrowing from the KPERS fund, but not paying it back AND contributing only half of what they are supposed to contribute.

  • The reason they are not contributing as they should is not the economy, this pattern long predates hard economic times. It is just another symptom of fiscal incompetence in Topeka.

  • Just ignore Toe, who has posted the exact quote twice now. KPERS is a great plan, better than many state plans.

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Jimo 4 years, 1 month ago

"I am 100% sure I can invest my money better than the government."

And psychologists are 100% sure that you're 99% wrong seeing that human beings have a long track record of irrationally overestimating their investment prowess. If you could invest better there's a multi-million dollar job waiting for your in the the financial industry.

"Where? If you had been investing in stocks and bonds (as KPERS does,) you'd almost certainly have lost a considerable amount of your investment over the last two years."

Two years? Are there a lot of people contributing for two years and then retiring (and immediately using their accumulated savings)? Is there even one such person? If you start with a propositional fallacy you're likely to end up with a false result. For a retirement focused plan with a time horizon of 20-40 years, stocks and bonds are easily the best places to save. By far. Like for as long as bond and stocks have existed.

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George Lippencott 4 years, 1 month ago

Welcome to the club. Just about every governments commitments to their employees is underfunded and at the federal level on the block. I might add that just about every long term federal commitment to anybody is underfunded and on the block. Yet we want to establish a whole bunch of new government commitments to new players - income transfers for health care comes to mind. Why do we keep falling for this line??? Remember most of the people making these promises are independently wealthy and do not pay their fair share of the costs of that which they promise. They only seek reelection. There is no commitment to actually paying for their promises.

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Mary Sucha 4 years, 1 month ago

Social Security and KPERS are defined benefit retirement plans. Your retirement is based on average salary and number of years worked. The state is on the hook to pay the benefits. State employees have 4% of their salary put into KPERS while the state for many years put in 2% or less, eventhough they were required to match the 4%.

Isn't AIG an insurance company? Be careful of people trying to sell you annuities, they have high fees and it is possible for the insurance company to go broke. ING also received bailout money from their government.

If you are one of the sheep that believes the wall street types and bought an held stocks in your 401K, since 1999 you have lost money.

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just_another_bozo_on_this_bus 4 years, 1 month ago

There are two main problems with KPERS right now-- the first, and probably the largest at this point, is that the legislature failed to fulfill its promises to its employees. The second is the downturn in the economy, which has affected nearly everyone's investments, individual or institutional.

But if Social Security, or KPERS, ever go completely belly up, it'll be because the entire economy has gone belly up. The ability to "invest your own money" would not make you immune in such a situation. You'd be screwed just like everyone else.

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lawrencian 4 years, 1 month ago

It is going to take a LOT more than a legislative pay cut to make up for under-funding KPERS in the past few years.

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ferrislives 4 years, 1 month ago

STRS: That's pretty much what I was going to say to Bozo. Savings, COD's, money market accounts, they are all investments. And state employees should have the right to invest that money wherever they want. After a year of service, they're currently required to have part of their check go into a system, knowing that the likelihood of seeing that money matches the likelihood of seeing social security at retirement.

The legislature screwed up by not funding KPERS over the past several years, and they should find a way to fund it now, including taking a pay cut themselves.

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jafs 4 years, 1 month ago

bk,

Ah, so you sell them.

They may not be any more dangerous than other annuities, but annuities in general are not backed by anything like FDIC, and thus there is a possibility that you will in fact lose money, no matter how much the insurance company salespeople say otherwise.

Ours said "I've never seen anyone lose money in them". Ok, but that's certainly not a guarantee.

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SettingTheRecordStraight 4 years, 1 month ago

Who really cares what savings method a worker prefers? If promises from KPERS and the Social Security Administration are enough to let someone sleep at night, more power to them. But it's immoral that the government would forcibly confiscate 12.4% of every worker's income in the form of a Social Security penalty.

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kugrad 4 years, 1 month ago

Having invested in the stock market during the last several years I have found that I did not lose large amounts of money. On the contrary, I made good money. The key, besides prudent investments, was not to sell during a downturn as many people do. You haven't lost money until you sell. That doesn't mean you should hold onto a loser if you have a better place to invest your $, but the people who profited during the last few years are those who never stopped buying, not those who bailed out.

The state is not behind in KPERS because they invested their money poorly, they are actually fairly decent money managers. The problem is the lack of promised funding.

Our state government has a responsiblility to adequately fund programs that are currently required by law. If they cut taxes below the level they need to sustain necessary programs, they absolutely have to raise taxes. I don't like higher taxes, but I do like the government to make good on its legal obligations. Tax increases can be necessary at times. This is one of those times.

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just_another_bozo_on_this_bus 4 years, 1 month ago

"Bozo, state employee's money would have probably done better in a savings account or a COD at this point, if they had the choice. Some lost 30% or more of the money put in. Do you get KPERS? Because you don't seem to know what you're talking about."

I wasn't defending KPERS, or their investment strategy. You may be right about investing in a savings account or CD, but those clamoring for the right to invest their own money aren't talking about those savings methods.

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lawrencian 4 years, 1 month ago

As a state employee, I would also be interested in having more than just one option for retirement planning. Since the legislature does not pay market value for my job, though, I can't actually afford to save anything "extra" on top of my mandated KPERS contribution. The only real benefit to my job, in spite of depressed wages and the bad retirement plan is actually health insurance. If I didn't want to keep that, I'd be quicker to jump to a more satisfying job.

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Brent Garner 4 years, 1 month ago

jafs:

FIAs are sold through insurance companies. For your information the plans have to be approved by each state's insurance department where they are sold or they cannot be sold. Also, all insurance companies are regulated. At least by the insurance department of the state where they are headquartered. All insurance companies have to maintain a reserves to liabilities ratio of at least $1.01 of reservers for every $1 of liabilities. That is the law! FIAs do not invest in stocks or indexes. The interest rate credited is linked to the performance of an index, usually the S&P 500. Most FIAs also offer a fixed account which is roughly equivalent to a 1 year CD although I have observed that the rates are better, usually. Have there been problems with some FIA designs? Yes, and no doubt CR is focusing on those. It would be easy to do. However, having used them for over 10 years in an insurance practice I can tell you that the designs I used posed no greater "risk" to the consumer than your typical Fixed Annuity--pays only an interest rate, no indexing. I have seen various designs return as high as 18% during a bull market but never less than zero and that was during a bear market. It is all in the contract which again has to be approved by the state insurance departments before it can be marketed in the state. And today, many FIAs also offer Guaranteed Income Benefits similar to those offered by variable annuities.

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ferrislives 4 years, 1 month ago

just_another_bozo_on_this_bus (anonymous) says...

"I am 100% sure I can invest my money better than the government."

Where? If you had been investing in stocks and bonds (as KPERS does,) you'd almost certainly have lost a considerable amount of your investment over the last two years. Same goes for real estate.

Bozo, state employee's money would have probably done better in a savings account or a COD at this point, if they had the choice. Some lost 30% or more of the money put in. Do you get KPERS? Because you don't seem to know what you're talking about.

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SettingTheRecordStraight 4 years, 1 month ago

Allow state employees to opt out of KPERS, and allow all workers everywhere to opt out of Social Security.

Since that may never happen, it is incumbent upon every worker to save for his/her own retirement and future health care. We cannot count on our government or government programs to sustain us.

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toe 4 years, 1 month ago

KPERS was never a retirement plan, it was a political plan.

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Nurnberg 4 years, 1 month ago

It is easier to pay people in promises than money.

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jafs 4 years, 1 month ago

Well, after a cursory google search, I found that Consumer Reports is not keen on FIA'a.

I generally trust CR.

Also, the descriptions of FIA's are not completely clear. You are somehow mimicking stock indexes but not investing in them?

Are they insurance products? If so, how are they regulated/insured? For example, insurance company annuities are generally not FDIC insured. So, there is no actual guarantee that you won't lose money, simply the company's statement.

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jafs 4 years, 1 month ago

Social Security is much worse than KPERS, clearly.

I'll look into FIA's - if they're really so good, why isn't everyone investing in them? 401K's replaced pension plans at most companies a long time ago.

The motive, imho, in Washington, is not the retention of power, but the protection of ordinary people from their own stupidity.

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Brent Garner 4 years, 1 month ago

Interestingly enough there has existed for over 10 years an investment vehicle in which you can invest for retirement--note I am referring to long term money not short term--without having to experience the downside risks of the market and yet participate in the upside gains. I am referring to what were called Equity Indexed Annuities which now are often referred to as Fixed Indexed Annuities. Indeed if Renaissance had been allowed--note allowed--to invest in such an instrument he/she would have suffered no losses at all but would have had at least some gains as gains are usually captured annually in such instruments and made part of the vested principle. Would such instruments outperform the market during a bull phase? Not on your life! However, for security combined with the chance for a portion of the market's gains without the risks of loss due to market action, they represent an excellent alternative. But instead we have KPERS where our public employees are compelled by law to surrender a portion of their income to be managed by the state which has mismanaged it badly even before the latest market downturn. Social Security is not much better. I dare say that the FIAs would beat Social Security hands down over the lifetime of your typical worker. But, you won't ever be able to divert your social security taxes into such an account. That would take too much power away from those leeches in Washington.

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jafs 4 years, 1 month ago

Renaissance,

Perhaps.

But doesn't your employer pay a matching amount into KPERS?

So you pay 1/2 of the funds invested, and get the return on the total.

If the state funds the system adequately, it is an excellent retirement plan, with defined benefits and a much better rate of return than Social Security.

Just out of curiosity, let's assume you did in fact invest your half and wound up losing money (as many people did with their 401K plans), what would you do when you retire?

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just_another_bozo_on_this_bus 4 years, 1 month ago

"I am 100% sure I can invest my money better than the government."

Where? If you had been investing in stocks and bonds (as KPERS does,) you'd almost certainly have lost a considerable amount of your investment over the last two years. Same goes for real estate.

"Worst case scenario if I'm wrong about being able to better invest my money than the government????"

Being a destitute old man/woman needing a government handout to survive.

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somebodynew 4 years, 1 month ago

"Indeed, what is the matter with Kansas when Kansans continually elect such miscreants?"

There my friends is what EVERYONE should think about. A great letter that lays out the problems. If the funding had been put in and not "stolen" for other pet projects KPERS would not be in such bad shape that they feel like they have to raid employees checks (small as they are) for even bigger contributions.

Gee, wasn't there just an article the other day about them delaying payment for the schools for the FIFTH month in a row, and of course NOT making their payment into the retirement system.

Wish I could just delay my house payment when it just isn't convienient for me. Or maybe my taxes. How do you think that would go over??????

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Matthew Herbert 4 years, 1 month ago

Yet another reason why state employees ought to be able to opt-out of retirement plans. I am 100% sure I can invest my money better than the government. Yet, for the last 4 years they have forcibly taken parts of my paycheck. Worst case scenario if I'm wrong about being able to better invest my money than the government???? I simply lose MY money. That story has no different ending than the current policy of forcing me to pay into KPERS only to have the government lose MY money.

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