Removing the Fourteenth Amendment

[StrangeSox]

And the pensions are being stripped back more and more every year.

[Texsox]

That's what pensions are for, right? (serious question - teachers are highly pensioned)

 

There is widespread fear that there will be an immigration bill where illegals will be given full citizenship and apparently social security will be amended to allow people with no service time to receive retirement benefits. Presumably, the law would be illegal if it specifies former illegals only, so it would also open the door to anyone who isn't vested to quickly become vested. I find it hard to believe that elected official will bankrupt social security to allow newly created citizens these benefits, but many intelligent people do believe it will happen.

[Texsox]

And the pensions are being stripped back more and more every year.

 

My dad just lost $300 per month from his.

[NorthSideSox72]

My dad just lost $300 per month from his.

I am all for phasing out pensions. But I am adamantly opposed to taking away money to those who already have it granted to them. If you have put in X dollars over X years to provide payouts of X dollars later, you should get those, unless the government entity is literally bankrupt. They should really just say, no one new goes in.

 

[Balta1701]

I am all for phasing out pensions.

Serious question...why? Is there some inherent benefit to a defined contribution plan compared with a defined benefit plan that is actually going to convince me that they're better? (And by convince me, I'm trying to deliberately exclude variations on the company assuming less risk, because I'm going to counter that having individuals assume more risk is bad).

[NorthSideSox72]

Serious question...why? Is there some inherent benefit to a defined contribution plan compared with a defined benefit plan that is actually going to convince me that they're better? (And by convince me, I'm trying to deliberately exclude variations on the company assuming less risk, because I'm going to counter that having individuals assume more risk is bad).

Well, I tend to look at this as if these were all businesses, even though many are actually government entities.

 

The reasons are pretty simple. You are promising a consistent cash flow out every year to a number of people, based on returns you get which are NOT consistent. The only way you can feel OK about that as a leader of a business or agency, is if the inconsistent returns give you serious premium over the intended outflow over long periods, to make up for the periods where you are hemorraging cash. And frankly, I would not be OK making that leap of faith, especially when I know that I have to invest in relatively conservative vehicles for this type of service.

 

Furthermore, over the long haul, the broader markets and mutual funds will pay out better than any pension would anyway, so its better for the recipient as well - with one exception. If/when the agency/company running the scheme falls short and turns it into a pyramid scheme, with inflows being heavily leveraged for the outflows, then the current recipients win, and everyone else loses.

 

401k with a match is simply the best, safest model for everyone involved.

 

[Balta1701]

I'm sure you didn't mean to...but I think the whole first paragraph of your argument is exactly what I put in my parenthesis. It's a much more stable cash outflow for the company correct...but it's a much less stable inflow for the retiree. In other words...the company benefits because they've transferred the risk of a downfall from their liabilities on to their workers.

 

I think you also need to add a major exception to your argument that broader markets and mutual funds pay out better over the long run...because for the last 10 years that's been essentially untrue...broader markets and mutual funds have paid out worse than holding nothing but cash/bonds over the last 10 years.

[NorthSideSox72]

I'm sure you didn't mean to...but I think the whole first paragraph of your argument is exactly what I put in my parenthesis. It's a much more stable cash outflow for the company correct...but it's a much less stable inflow for the retiree. In other words...the company benefits because they've transferred the risk of a downfall from their liabilities on to their workers.

 

I think you also need to add a major exception to your argument that broader markets and mutual funds pay out better over the long run...because for the last 10 years that's been essentially untrue...broader markets and mutual funds have paid out worse than holding nothing but cash/bonds over the last 10 years.

On your first graf, I think it simply makes more sense for the recipient/employee to take the risk than the company - and by the way, get greater rewards too, long run - because the recipient can wait 30 years for the payout. The company, in a pension situation, has to pay out every single year regardless of the markets.

 

And this goes to your second graf. The "lost decade" is exactly the reason why it benefits both the company/agency AND the recipient/employee to have their money in the markets in a 401k. For the company, it means they can survive a down market, and still employ people. For the employee, it means a buying opportunity over the long haul.

 

[Balta1701]

And this goes to your second graf. The "lost decade" is exactly the reason why it benefits both the company/agency AND the recipient/employee to have their money in the markets in a 401k. For the company, it means they can survive a down market, and still employ people. For the employee, it means a buying opportunity over the long haul.

And for the 29 year old looking for a long term position...it means trouble, because the 70 year old is still working because his retirement savings evaporated.

 

See, I can be selfish sometimes too.

[StrangeSox]

On your first graf, I think it simply makes more sense for the recipient/employee to take the risk than the company - and by the way, get greater rewards too, long run - because the recipient can wait 30 years for the payout. The company, in a pension situation, has to pay out every single year regardless of the markets.

 

And this goes to your second graf. The "lost decade" is exactly the reason why it benefits both the company/agency AND the recipient/employee to have their money in the markets in a 401k. For the company, it means they can survive a down market, and still employ people. For the employee, it means a buying opportunity over the long haul.

 

For my grandmother, it means moving in with my aunt and uncle.

[bmags]

Politically speaking, there is a reason why pensions could get so huge and bloated in the public sector. It's called punting. And while it could raise some hell to give actual wage increases during a political term, it was easy for them to punt 20-30 years down the line when it wasn't their problem. Over and over.

[Balta1701]

Politically speaking, there is a reason why pensions could get so huge and bloated in the public sector. It's called punting. And while it could raise some hell to give actual wage increases during a political term, it was easy for them to punt 20-30 years down the line when it wasn't their problem. Over and over.

Plus, it's a great private financial decision to assume that your pension fund is going to grow at 7% a year so you can put less into it and carry away the difference.

[EvilMonkey]

Politically speaking, there is a reason why pensions could get so huge and bloated in the public sector. It's called punting. And while it could raise some hell to give actual wage increases during a political term, it was easy for them to punt 20-30 years down the line when it wasn't their problem. Over and over.

Only problem with that is most got both, wage increases AND thier bloated pensions.

[southsider2k5]

Only problem with that is most got both, wage increases AND thier bloated pensions.

 

Don't forget bloated pensions in most cases are based on bloated government wages.

[Texsox]

Don't forget bloated pensions in most cases are based on bloated government wages.

 

Are the wages for the vast majority of government workers really that high? I know we hear of some directors and stuff that are making what sounds like generous salaries, but it seems most workers are in line with private sector jobs.

[EvilMonkey]

Are the wages for the vast majority of government workers really that high? I know we hear of some directors and stuff that are making what sounds like generous salaries, but it seems most workers are in line with private sector jobs.

The Plainfield school district here wants to accelerate and increase the pay for first year principals from $116,500 per year to $121,400 per year because "many of the assistant principals we are interviewing are making more than that and wold have to take a pay cut." I read that (in an actual paper!) at dinner tonight. I would say that 6 figures for an assistant or regular principal seems like a lot, for running one school.

[Balta1701]

The Plainfield school district here wants to accelerate and increase the pay for first year principals from $116,500 per year to $121,400 per year because "many of the assistant principals we are interviewing are making more than that and wold have to take a pay cut." I read that (in an actual paper!) at dinner tonight. I would say that 6 figures for an assistant or regular principal seems like a lot, for running one school.

Gotta retain top talent!

[lostfan]

Are the wages for the vast majority of government workers really that high? I know we hear of some directors and stuff that are making what sounds like generous salaries, but it seems most workers are in line with private sector jobs.

Federal employees make a decent living wage but you'd never mistake them for a rich person. I'm talking rank and file types, not senior management or SES.

[StrangeSox]

There's also a lot less McJobs with little or no education and skills required in government work, so the "government workers earn twice as much as private sector!" thing is a canard.

[EvilMonkey]

There's also a lot less McJobs with little or no education and skills required in government work, so the "government workers earn twice as much as private sector!" thing is a canard.

So are you saying that government workers are generally smarter than private sector employees, or just your average McDonalds workers?

[lostfan]

So are you saying that government workers are generally smarter than private sector employees, or just your average McDonalds workers?

I think he means more like, if see a government employee making $90,000 it's probably because there's a need for skilled labor and they're not just living fat.

[Texsox]

The Plainfield school district here wants to accelerate and increase the pay for first year principals from $116,500 per year to $121,400 per year because "many of the assistant principals we are interviewing are making more than that and wold have to take a pay cut." I read that (in an actual paper!) at dinner tonight. I would say that 6 figures for an assistant or regular principal seems like a lot, for running one school.

 

That does seem a little high. I'm trying to figure what an equivalent position would be in the private sector. Most principals would have close to 100 employees, anywhere from 600 to over a thousand "customers". Lots of mandates and government regulations. A restaurant that will feed a thousand meals a day. Perhaps a sports program. The fixed assets in the millions that they are responsible for.

 

A plant manager for a maquila in Mexico here would make easily that with bonuses pushing well beyond that.

[Texsox]

So are you saying that government workers are generally smarter than private sector employees, or just your average McDonalds workers?

 

The civil service process may weed out some, but I'd guess overall it is about the same for the McJobs*.

 

*I believe we're taking about those that are exactly equal.

[EvilMonkey]

That does seem a little high. I'm trying to figure what an equivalent position would be in the private sector. Most principals would have close to 100 employees, anywhere from 600 to over a thousand "customers". Lots of mandates and government regulations. A restaurant that will feed a thousand meals a day. Perhaps a sports program. The fixed assets in the millions that they are responsible for.

 

A plant manager for a maquila in Mexico here would make easily that with bonuses pushing well beyond that.

Do they also get to retire at 50 with full pension and paid medical, summers off while working, and days that end at 3 pm? Plus an untold amount of days off throughout the year for every holiday known to man? I understand your anaolgy, I just dont quite agree with it.

 

I forgot to mention that in the story about the district wanting to increase principal pay, they also mentioned that they had just laid off about 20 teachers and cut the sports budgets.

Edited August 21, 2010 by Alpha Dog

[Rex Kickass]

Do they also get to retire at 50 with full pension and paid medical, summers off while working, and days that end at 3 pm? Plus an untold amount of days off throughout the year for every holiday known to man? I understand your anaolgy, I just dont quite agree with it.

 

I forgot to mention that in the story about the district wanting to increase principal pay, they also mentioned that they had just laid off about 20 teachers and cut the sports budgets.

 

I don't know many teachers that get paid during the summer, actually. Most of them either get paid just for the 9 months they work, or have their checks prorated across 12 months.