Archive for Sunday, December 11, 2011

Public retirement ages, benefits come under greater scrutiny

December 11, 2011

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— After nearly 40 years in public education, Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter.

His departure from the workaday world is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life.

Such guaranteed pensions for relatively youthful government retirees — paid in similar fashion to millions nationwide — are contributing to nationwide friction with the public sector workers. They have access to attractive defined-benefit pensions and retiree health care coverage that most private sector workers no longer do.

Experts say eligible retirement ages have fallen over the past two decades for many reasons, including contract agreements between states and government labor unions that lowered retirement ages in lieu of raising pay.

With Americans increasingly likely to live well into their 80s, critics question whether paying lifetime pensions to retirees from age 55 or 60 is financially sustainable. An Associated Press survey earlier this year found the 50 states have a combined $690 billion in unfunded pension liabilities and $418 billion in retiree health care obligations.

Three-quarters of U.S. public retirement systems in 2008 offered some kind of early-retirement option paying partial benefits, according to a 2009 Wisconsin Legislative Council study. Most commonly, the minimum age for those programs was 55, but 15 percent allowed government workers to retire even earlier, the review found. The study is widely regarded as the most comprehensive assessment of the issue.

Police and firefighters often can retire starting even younger — at around age 50 — because of the physically demanding nature of some of those jobs.

Godwin said all the antagonism toward public retirees is misplaced. His pension payout follows 36 years as an English teacher and school administrator in California, with two years’ sick-leave credit added for never being absent.

He said lack of accountability on Wall Street and exorbitant corporate salaries are a more justified target of the public’s anger.

“Those things I think are a much larger problem than what a public employee is making as a pension,” he said. The AFL-CIO labor coalition’s Executive PayWatch project estimates chief executives went from making 42 times the average blue collar worker’s salary in 1980 to 343 times as much last year.

Overall, Americans are working to older ages — even with the expanded ability for some to collect partial pensions younger if they retire. Over the past 20 years, the average retirement age for men has edged up to 64, for women to 62, according to the Center for Retirement Research at Boston College.

Experts say no reliable figures exist that could show whether public sector workers retire younger than their private-sector counterparts. It is clear, though, that most private-sector workers no longer receive defined-benefit pensions that will pay them for life. Most must wait until age 65 or 67 to collect their full Social Security benefit or draw from 401(k) accounts that are invested in the stock market and, in many cases, have sustained significant losses during the recession.

It is this shift in the style of benefits, and not the age of retirement, that should be scrutinized, said Hank Kim, executive director of the Washington, D.C.-based National Conference on Public Employee Retirement Systems, which advocates for government pensions.

“I think the biggest difference between the private and the public sector is that, for whatever reason, the private sector has largely abandoned the pension system,” he said.

Kim believes that shift has left a generation of private employees — who make up the bulk of the American labor force — unprepared for retirement. In 2010, there were 18 million government workers and 94 million private sector workers in the U.S.

Comments

cato_the_elder 3 years, 3 months ago

"After nearly 40 years in public education, Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter.

His departure from the workaday world is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life."

Did this guy ever make $174,000 a year while he was working? And he retires at only 59? You need look no further than this to see why Califonia is bankrupt.

just_another_bozo_on_this_bus 3 years, 3 months ago

"Did this guy ever make $174,000 a year while he was working?"

Almost certainly. I'd guess that this is a significant pay cut from what his last salary was.

Most public employees get nothing close to this in retirement benefits.

cato_the_elder 3 years, 3 months ago

If indeed this represents a "significant pay cut," then, as I previously said, you need look no further than this to see why California is bankrupt.

just_another_bozo_on_this_bus 3 years, 3 months ago

I'll almost guarantee you that he was as school superintendent.

While I can agree that in the grand scale of things, school administrators are paid way too much relative to what teachers get, it's petty cash compared to what banksters get-- and they're the ones who have trashed the economy, not public employees.

Armstrong 3 years, 3 months ago

Do the math. If the guy worked 40 years and he is now 59, he statrted at 19. How many 19 year old superintendents do you know. Me thinks your guarentee is worthless.

kochmoney 3 years, 3 months ago

Because they have a crazy cost of living and a voter initiative that prevents them from raising taxes to pay for the other voter initiatives that call for spending?

40 years of service at age 59 = he started working at age 19. It turns out that he only has 36 years of service, which is somehow "nearly 40." That's a sloppy rounding error. Also, he was an administrator, not just a teacher, so he probably got a super sweet deal, and part of his pay includes unused sick leave from never having missed a day of work. He may also have had separate retirement accounts on top of the state program (that's very common in Kansas at least). If the reporter is being sloppy with the rounding errors, I'm sure a few additional bits of good financial planning on Godwin's part will go unmentioned.

jhawkinsf 3 years, 3 months ago

"He said lack of accountability on Wall Street and exorbitant corporate salaries are a more justified target of the public's anger".
No. Public employees get their money from the public. It is precisely because of that that we the public should be looking at public service employees. Wall Street is private business that should be scrutinized by the owners of those companies. CEO wages should be set by Boards of Directors with scrutiny by shareholders. It's none of our damn business what the wages are on Wall Street. (The exception being of course companies that receive public monies in the form of bailouts, which I personally am opposed to. If those bailouts have not been repaid in full with interest, then the public has a legitimate reason to scrutinize).

just_another_bozo_on_this_bus 3 years, 3 months ago

What you're really saying is that we have no power to control the ripoffs that Wall Street perpetrates on the entire economy, and you agree with that, but in order to pick up the slack when that collapses the economy, we need to screw public employees, who did absolutely nothing but go to work.

cato_the_elder 3 years, 3 months ago

And also take boatloads of coerced union dues and give most of that money to Democrats' election campaigns.

kochmoney 3 years, 3 months ago

Really? Coerced? You don't need to be a union member to be a pubic employee in this state. Nor do you need to be a democrat.

jhawkinsf 3 years, 3 months ago

No, what I said was that there are times when it's my business and times when it's not. And we need to recognize the difference.
Of course, we are all free to give our opinions whenever we choose. But that's all they are and that's all they should be.

jafs 3 years, 3 months ago

Private companies also get their money from the "public" - who else would buy their products and services?

As such, we are paying for private sector salaries as well as public sector ones - why is one of those none of our business?

jhawkinsf 3 years, 3 months ago

You can't be serious. There is a difference between public money and how an individual member of the public chooses to spend their money.
Take an example of two companies. One is publicly traded, one is not. The compensation package given to the CEO of the publicly traded company is set by the Board and is available to shareholders and ultimately, it becomes available to the public. The compensation given to a privately held company is not available, nor is it my business. I can choose to do business with them or not. Just because I may or may not do business with them, or if you make that choice, their compensation is none of my business. The government is like a publicly traded company. I know how much money the governor makes, what I make is none of his business. You know how much the President makes, what you make is none of his business.

voevoda 3 years, 3 months ago

If the public has to depend upon private companies to obtain essential goods and services, then it certainly is the public's business how much CEOs and shareholders are getting. If the public is being gouged to pay for overcompensated executives, then the public is justified in complaining about it. Sometimes we don't have the option of just taking our dollars to another provider--think about Westar, for example, or communities that have only one grocery store.

jhawkinsf 3 years, 3 months ago

You're mixing apples and oranges. "Essential" goods and services, like Westar are regulated. Rates hikes must be approved by government officials. Imagine if your local restaurant had to have rate hikes approved by the government. As to your grocery store, they do have a choice. Go to another. In another town maybe. Or they could move. It's their choice.

just_another_bozo_on_this_bus 3 years, 3 months ago

Published on Sunday, December 11, 2011 by The Independent/UK Bankers are the Dictators of the West by Robert Fisk

http://www.independent.co.uk/opinion/commentators/fisk/robert-fisk-bankers-are-the-dictators-of-the-west-6275084.html

Writing from the very region that produces more clichés per square foot than any other "story" – the Middle East – I should perhaps pause before I say I have never read so much garbage, so much utter drivel, as I have about the world financial crisis.

But I will not hold my fire. It seems to me that the reporting of the collapse of capitalism has reached a new low which even the Middle East cannot surpass for sheer unadulterated obedience to the very institutions and Harvard "experts" who have helped to bring about the whole criminal disaster.

Let's kick off with the "Arab Spring" – in itself a grotesque verbal distortion of the great Arab/Muslim awakening which is shaking the Middle East – and the trashy parallels with the social protests in Western capitals. We've been deluged with reports of how the poor or the disadvantaged in the West have "taken a leaf" out of the "Arab spring" book, how demonstrators in America, Canada, Britain, Spain and Greece have been "inspired" by the huge demonstrations that brought down the regimes in Egypt, Tunisia and – up to a point – Libya. But this is nonsense.

The real comparison, needless to say, has been dodged by Western reporters, so keen to extol the anti-dictator rebellions of the Arabs, so anxious to ignore protests against "democratic" Western governments, so desperate to disparage these demonstrations, to suggest that they are merely picking up on the latest fad in the Arab world. The truth is somewhat different. What drove the Arabs in their tens of thousands and then their millions on to the streets of Middle East capitals was a demand for dignity and a refusal to accept that the local family-ruled dictators actually owned their countries. The Mubaraks and the Ben Alis and the Gaddafis and the kings and emirs of the Gulf (and Jordan) and the Assads all believed that they had property rights to their entire nations. Egypt belonged to Mubarak Inc, Tunisia to Ben Ali Inc (and the Traboulsi family), Libya to Gaddafi Inc. And so on. The Arab martyrs against dictatorship died to prove that their countries belonged to their own people.

continued

just_another_bozo_on_this_bus 3 years, 3 months ago

continued

And that is the true parallel in the West. The protest movements are indeed against Big Business – a perfectly justified cause – and against "governments". What they have really divined, however, albeit a bit late in the day, is that they have for decades bought into a fraudulent democracy: they dutifully vote for political parties – which then hand their democratic mandate and people's power to the banks and the derivative traders and the rating agencies, all three backed up by the slovenly and dishonest coterie of "experts" from America's top universities and "think tanks", who maintain the fiction that this is a crisis of globalization rather than a massive financial con trick foisted on the voters.

The banks and the rating agencies have become the dictators of the West. Like the Mubaraks and Ben Alis, the banks believed – and still believe – they are owners of their countries. The elections which give them power have – through the gutlessness and collusion of governments – become as false as the polls to which the Arabs were forced to troop decade after decade to anoint their own national property owners. Goldman Sachs and the Royal Bank of Scotland became the Mubaraks and Ben Alis of the US and the UK, each gobbling up the people's wealth in bogus rewards and bonuses for their vicious bosses on a scale infinitely more rapacious than their greedy Arab dictator-brothers could imagine.

I didn't need Charles Ferguson's Inside Job on BBC2 this week – though it helped – to teach me that the ratings agencies and the US banks are interchangeable, that their personnel move seamlessly between agency, bank and US government. The ratings lads (almost always lads, of course) who AAA-rated sub-prime loans and derivatives in America are now – via their poisonous influence on the markets – clawing down the people of Europe by threatening to lower or withdraw the very same ratings from European nations which they lavished upon criminals before the financial crash in the US. I believe that understatement tends to win arguments. But, forgive me, who are these creatures whose ratings agencies now put more fear into the French than Rommel did in 1940?

continued

just_another_bozo_on_this_bus 3 years, 3 months ago

continued

Why don't my journalist mates in Wall Street tell me? How come the BBC and CNN and – oh, dear, even al-Jazeera – treat these criminal communities as unquestionable institutions of power? Why no investigations – Inside Job started along the path – into these scandalous double-dealers? It reminds me so much of the equally craven way that so many American reporters cover the Middle East, eerily avoiding any direct criticism of Israel, abetted by an army of pro-Likud lobbyists to explain to viewers why American "peacemaking" in the Israeli-Palestinian conflict can be trusted, why the good guys are "moderates", the bad guys "terrorists".

The Arabs have at least begun to shrug off this nonsense. But when the Wall Street protesters do the same, they become "anarchists", the social "terrorists" of American streets who dare to demand that the Bernankes and Geithners should face the same kind of trial as Hosni Mubarak. We in the West – our governments – have created our dictators. But, unlike the Arabs, we can't touch them.

The Irish Taoiseach, Enda Kenny, solemnly informed his people this week that they were not responsible for the crisis in which they found themselves. They already knew that, of course. What he did not tell them was who was to blame. Isn't it time he and his fellow EU prime ministers did tell us? And our reporters, too?

© 2011 The Independent

http://www.independent.co.uk/opinion/commentators/fisk/robert-fisk-bankers-are-the-dictators-of-the-west-6275084.html

camper 3 years, 3 months ago

"after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life"

This pension is a bit too high in my opinion. Something closer to 1/3 of the amount above seems fair. The problem with paying these high pensions is that it is crowding out younger folks who have a desire to move into the profession.

This is the same problem that plagued the auto industry, when the big three were actually paying more to retired workers than current empoloyees (atleast this is what I heard). No wonder jobs are being exported. Being over generous with pensions ironically is making it harder for others to retire at 60 or so.

kochmoney 3 years, 3 months ago

What was his salary before retirement? It doesn't say. Did he put money aside into an IRA or other account? It doesn't say. How much would the typical mid to upper level administrator in his area retire with? It doesn't say. Has California changed their pension funding laws? It doesn't say. Is this a city-specific fund or a statewide thing? It doesn't say. It also claims that 36 years is "nearly 40."

I'm not saying that he isn't overpaid. It seems high on the surface to me, too, but I feel like the reporter has been misleading in the article, and I don't feel that I have the data to fully analyze the issue. That won't stop the current ALEC crowd from using the article as justification for screwing over teachers that were counting on a $30k pension for life.

camper 3 years, 3 months ago

Exactly, this is the stuff that creates a backlash against teachers. To my knowledge, it is the administrators who really drain the pension fund. It is the people like this guy in California who is screwing over the majority of hard working teachers.

I know a retired principal who is taking in six figures on his pension and also drawing unemployment to boot. He was laid off from his private sector job that he took when he retired from the school district. Terrible that he would play the system like this.

kochmoney 3 years, 3 months ago

It's upper management that screwed the private sector pension plans, too. And those are exactly the sorts of people that never really had to worry about it when they retired.

jhawkinsf 3 years, 3 months ago

During some austerity protests in Europe a year or so ago, I saw an interview with a Frenchman, a bus driver. He had put in his 20 years and now wanted what was promised him, a full pension. He was 39 years old. I just don't see how a system like that is sustainable. So, too, a system described in this article. Right or wrong, the numbers just won't work in the long run.

kochmoney 3 years, 3 months ago

Wow. What a freaky person you saw, since the OECD report lists the pensionable age in France as 60.5.

imastinker 3 years, 3 months ago

You guys want to know why the amount is so high? Calpers pays out benefits based on the highest year of service. He got his two years sick time paid out at the same time he was workng, in essence making three times his salary for a year. Then his entire pension is based on that one year.

KPERS does the same thing, except its the highest three years instead of the top one.

kochmoney 3 years, 3 months ago

There you go. Seems an easy enough fix. Stop allowing carryover sick pay, or don't allow it to count as part of salary for retirement calculation.

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