The Sentinel is a pretty good paper. Here's an article about the state and local government pension problem:
http://www.sentinelandenterprise.com/editorial/ci_22417607/patrick-ignores-pension-crisis
I'm in favor of putting the cost of everyone's pension in the account for the budget year. We need to pay for pension liability as we go. One thing this kind of budgeting would do - it would make local government more realistic of the actual costs when these union contracts are negotiated.
Some figures from that article:
$183,000,000 each month just for school retirees, $2,190,000,000 per year. Retired cops, firefighters, light company employees etc also must be paid.
Massachusetts has only 63 cents funded for every dollar owed.
Look at the pension liabilities. Very generous - to get $80k in pension, how much did they make while working? 171 retired school workers get over $100k in pension payments each year.
If the town's budget looks bad, how bad does it look if we fully fund our pension liability?
The teacher's retirement is fully funded by the teachers 10 or 11% withholding as a separate system. No state money is used. I think I read someplace that the state actually kicks in about 2%, but I do not know what thats all about.
ReplyDeleteThere is no town liability for teacher pensions. Also there is no unfunded liabilities as of this time. If the paper said otherwise, they are wrong (as usual)
ReplyDeleteThere is no liability because the state appropriates money from tax revenue. Google how the mass teacher retirment is funded. Good Q and A on the site
Deletedid just that..suggest you look here
Deletehttp://www.malden.massteacher.org/files/Pension-FAQ3.pdf
It says that teachers fund 95% of their pension and there is zero liability from the school district. I;m not trying to get into a pissing contest...
just the facts m'am
looks like we got the attention of the teachers and treir union. to bad we can't get attention on why we are 26th in the world in math and science!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
DeleteOther countries do not put the sped and retards into the general school population like we do. That causes the whole average to fall down to the lowest common denominator. Teachers cannot eject disruptive students. Teachers have become expensive babysitters, jailers, parents, councilor, psycologist(I can't spell it), truant officer, all instead of being able to teach. I am not a teacher, but have spent time observing...something YOU should try sometime)
DeleteOur schools still produce the best scientists and engineers in world. Remember figures lie, and liars figure.
I heard of one story first hand: 7th grader tells teacher to "fuck off". Teacher calls parent about it. Parent asks teacher what the hell she did to piss the kid off. Principal fails to discipline kid for fear of a lawsuit. This happens everywhere. Most other societies do not tolerate this kind of behavior. Until that changes we are doomed as a country.
The teachers pension is not fully funded by the payroll contributions of the teachers. 10% would not come close to funding these pensions. Figure it out for yourself by putting the amount of your pension into an annuity calculator.
ReplyDeleteFor example, if you retire at age 60, to receive a pension of $80k per year, you would need to have saved $1.5 million. There is no way that payroll contributions of 10% or 11% will ever amount to anywhere close to $1.5 million. Do the arithmetic and you will see.
Here's a link:
ReplyDeletehttps://origin.bankrate.com/calculators/savings/simple-savings-calculator.aspx
Plug in the average amount you put into your pension. Not the latest amount, the average amount. For a person earning $114k per year, the $950 or $1045 per month would not make it to $1.5 million in 30 years. But the earnings in the earlier years would be much lower, lowering the amount of the teacher's contribution.
Even if you put in the latest amount, say $950 per month, 30 years would barely get you to $1 million @ 6.5%, compounded monthly. But you didn't put in $950 per month for 30 years, because the amount would be much less in the early years.
The article correctly states that we have a huge pension liability. $183,000,000 per month goes out. 6.5% is unheard of today, yet the state uses an even higher number for the projected return on the pension savings.
Plug your personal numbers into an annuity calculator. Age, spouse's age and amount of monthly payments are all that is needed. Here's one:
http://www.immediateannuities.com/
You are only partially correct. You misunderstood my argument. I said that the teacher pension fund is self funded (no taxpayer contribution from the general fund..and that is still true) You have argued that each individual teacher has not funded their own retirement.That is also true. That pension fund is like the federal SS system, it depends on new members paying into fund to pay the retired members...a giant ponzi scheme at best just like the SS system.
DeleteSo for the record: I am not a teacher. I dislike unions, they have mostly have outlived their usefulness, and the taxpayers do *not* fund the teachers retirement system. Also teachers pay in 11% (soon to be raised, I believe). You only pay in 6.5% into SS and your employer pays the balance.
The "people's republic of Massachusetts" has not figured out how to raid the teacher's pension fund yet, as they have raided or not funded the other state retirement systems. Anyway most defined benefit systems have gone away because they are unsustainable ponzi schemes.
Excerpt from an MTA document so I do not agree with your statement that the taxpayers make no contribution. The General Fund of the Commonwealth is taxpayer money:
DeleteEmployer contributions: The Commonwealth
makes an annual appropriation for the payment of its share of public employee retirement benefits.
For the purposes of retirement benefits, the
Commonwealth is the “employer” for public
teachers. Local school district employers do not contribute toward their teachers’ retirement benefits.
This is interesting. Perhaps the state retirement system isn't so bad for the taxpayers after all. Found here:( http://www.massbudget.org/report_window.php?loc=Pension_3_11.html )
Delete"One important distinction between public and private sector workers in Massachusetts is that public sector workers are not eligible to participate in Social Security. Thus, state employees and teachers do not contribute the 6.2 percent of their salary toward Social Security. On the employer side, the state also does not contribute 6.2 percent of employees' salary (up to $106,800) toward Social Security. If the state were to abolish the pension system entirely for new employees and thus be required to participate in Social Security, costs would subsequently increase by about 3 percent of payroll, more than double what it pays now.
There is too much conflicting information out there regarding who pays what. Information can be found for both sides of this argument. I am finding this a waste of time for me as I do not have a dog in this fight. :) bye.
DeleteHi Mark,
ReplyDeleteJust a quick note. The state took over control all of the county retirement systems. I believe this was to gain access to the these funds to leverage more debt.
The same process is being used for the GIC...it looks like a good deal for the first few years and then oh oh our projections were off.
Pensions and retirement healthcare costs will continue to spiral out of control. These are larger issues than just Templeton. I'm not sure we should be discussing such global matters on this blog.
More food for thought...on a global scale...what would happen to our economy if Iran flooded the market with cheap oil? Iran is not obligated to use the money from oil profits to buy back US debt.
I'll be writing more on the LIBOR scandal and the USB (Swiss bank ) fine of $1.6 BILLION dollars (US).
Have a great day
Julie
Julie - the reason to discuss on this blog is because we don't fully consider the true cost when people are added to the town payroll.
ReplyDeleteFor example, the 4 FF that were proposed - the amount of the override did not include the pension funding.
Templeton could very well be bankrupted by pensions, as could any government entity. When PBGC took over the American Airlines pension plan, they reduced the pensions of already-retired airline pilots.
When we look to Boston or Washington for pork, just remember that maybe some obligations that we already have may suffer.
Yes, I think all of these larger problems affect us, as well. I just shake my head at some of the Huge pensions that are Not fully funded by the Unions of any branch, as they would like the general population to believe. I read where it now takes approx. 25 to 50 current workers to fund ONE retirement & those statistics are expected to increase each year, depending on the union. Most of these generous, over the top, retirement packages are now unsustainable. These inflated benefits all come back to bite what little pool of taxpayers are left. That pool gets smaller everyday, as does the pay of those of us who are straining, in these tough economic times, to hang onto our jobs, if we are even fortunate enough to still have one. The problems are multi-faceted and one of the biggest problems is greed & entitlement of some public sector jobs. Why should I have to foot the bill for everyone else's pension when I have to take care of my own? Of course, that's a laugh since I don't have even a smidgen of a pension, because I am & have been busy paying in for so many others for so many years, who are really much more capable of funding their own pensions than I am. However, that doesn't stop the greedy ones for taking more & more from us diligent workers & dedicated taxpayers, who are just about broke due to all the above & more. We are truly on a seriously unsustainable path that needs major overhaul & restructuring. And I don't mean redistribution of wealth, as this current "progressive" administration wants to do. I mean being more cautious of the privileges we have & be considerate capitalists. I have already seen too much redistribution of my hard earned dollars for the unions & those who just don't want to work. There is no more left in my pocket to fork over to someone else. I have had to take care of myself, with countless jobs I have not liked but I did them anyway. I have also had to make numerous concessions throughout my working career. Do I like the hard decisions? No, but I have adjusted & done what I have had to to make ends meet. I have not expected, when times have gotten tougher, that I am going to see an increase in pay or that someone else should pay my way. I think there are a lot of people who can't & won't do that because they think they are somehow superior to the rest of us & how dare anyone even suggest that they alter their life for one moment to relieve some pressure on those of us, who are not in that so-called privileged class! Well, they put themselves there, not me. Although I do appreciate all factions of the public service workers, I did not ask them to do those jobs. Instead of thinking we should "kiss the feet" of certain individuals, who are very well paid, it is my strong belief that they should be kissing ours for the opportunities they have had!! Now, while we still have a chance to recover, albeit it tougher each day, I would like to "echo" my request to resonate thoughout the town, that the few who have taken us to this low point in Templeton's history, please leave us alone while there is still time left, get on your horses & ride into the sunset. We will all gather around & celebrate while we wave you off to your last destination. Your stop over here has been long enough. Thanks for reading a few of my rambling thoughts & opinions. Glad you are better, Pauly. You have inspired me again to write about what a few have done to "Your Templeton, Our Templeton". Keep getting better & have a good day!!
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