Double-Dippers Are Not The Problem

Robert Mahon and Thomas Butler are  being villainized for collecting a New Jersey state pension while working as interim school superintendents yet, by all accounts, they are not breaking any rules by doing so.  They put in their time, made their salaries, and want to continue to serve and apparently there are people who believe they are of service.  They are not the problem with the New Jersey state pension system.

The real problem are those politicians who oversaw the bureaucrats who made the rules and the actuaries who lied about the cost of those benefits.  Witness those specimens of chimerical proselytizing: the annual New Jersey actuarial reports, three of which were released today*.

The cover letter from the Milliman actuaries for the July 1, 2013 Teachers’ Fund valuation concludes with:

 Combining an optimistic investment return assumption with a current actuarial value of assets that exceeds the market value of assets, along with an asset smoothing method which recognizes investment losses very slowly over time, will result in upward pressure on actuarially determined contribution requirements in future years.

A loose translation:

The 7.9% interest rate assumption and the games we are playing with the asset values and the funding method mean that we are, at the behest of the politicians who hire us, grossly understating the cost of this plan and the contributions necessary to fund benefits.  Unless future generations decide to forgo services while accepting increased taxes to pay for promised pensions the participants in this plan are screwed.

Robert Mahon and Thomas Butler are not trying to hide what they are doing.  They can honestly say that they earned what they are getting for the services they provided and they have every right to get upset when those pensions are arbitrarily curtailed in a few years.  The politicians, bureaucrats, and actuaries who put them in that position cannot say the same.



* When the PFRS report gets released next week I will have my annual update on the real numbers which are likely to show the real funded as ratio to be around 30% with the real underfunded liability nearing $180 billion.

17 responses to this post.

  1. Posted by Tough Love on March 7, 2014 at 1:28 am

    John, You hit is spot on with THESE words …”The real problem are those politicians who oversaw the bureaucrats who made the rules …”

    The problem is that the formulas are TOO rich and the full (unreduced) retirement ages are too young.

    If the formulas were comparable to those in the Private Sector (where DB Plan still exist) the per-year-of-service factors would be in the 1.00-1,25%-of-pay range, and the youngest unreduced age for payout would be 62 (and then only with 30+ years of service).

    If those TYPICAL Private Sector rules were in place for Public Sector Plans, the problem of double-dipping, would barely exist … because to earned a reasonable retirement, Public Sector workers would have to work for 35 years well into their 60s ….. .JUST LIKE THE REST OF US.


  2. Posted by Anonymous on March 7, 2014 at 3:42 am

    Yes run it the way GM did. Very honest and reasonable..


  3. Posted by George on March 7, 2014 at 9:44 am

    “Double-Dippers Are Not The Problem” There is no “The” problem. That’s the problem! Small pensions individually are not the problem but there are way to many of them. Large pensions are a problem individually but they go to politically unassailable types like university presidents or the police.

    Double dipping saves on medical costs since you are covering a retiree and an employee with the same medical guarantee.


    • Posted by Anonymous on March 7, 2014 at 12:16 pm

      I believe that these gentlemen will not get a second pension either and their employer has to make no pension contributions, plus they get a very experienced employee.


      • Among the reasons that making double-dippers the face of pension reform in New Jersey is counterproductive. I don’t know any details about the work history of these people but if they want to work and their efforts add to the common good then they should be encouraged.

        It’s those people who promulgate rules they don’t grasp or lie (intentionally or not) about costs to gain a perceived immediate advantage who should be pilloried.


        • Posted by Anonymous on March 7, 2014 at 6:36 pm

          In my former Police Dept officers retire on their normal pensions then they can apply for an existing civilian job ( dispatcher, property room, clerk etc.) if there is an opening at the normal civilian salary not their former officer salary. They do not collect a second pension when they leave, the City does not have to contribute to a pension system and health benefits. Everyone is happy the City gets a seasoned and knowledgeable employee who does not have to be trained and requires no benefits.


  4. Posted by haz on March 7, 2014 at 10:02 am

    TL as the answer to rob Peter to paid Paul. It wasn’t, our faulty that the politicians used the money. Now we got to pay to price for the job we love because average people like TL will go against us.


    • Posted by Tough Love on March 7, 2014 at 12:44 pm

      Get a grip.

      At EVERY pay level, (from the highest to the lowest), Public Sector pensions are AT LEAST 2x, MOST OFTEN 3x-4x, and SOMETIMES 4x-5x (for safety workers) greater in value at retirement than the pensions of Private Sector workers making the SAME pay, retiring at the SAME age, and having the SAME years of Service.

      This is unnecessary (to attract and retain a qualified workforce) and is patently unfair to Taxpayers who are responsible for all but the 10-20% of total Plan costs typically paid for by the workers (INCLUDING all the investment earnings on those contributions).

      “Funding” isn’t the problem, grossly excessive pension & benefit “Generosity” is.


  5. Posted by Anonymous on March 7, 2014 at 2:05 pm


    Have you noticed that John doesn’t respond to you very often?
    Perhaps it is because he doesn’t villify the public employee as you do(I’ve read some of your posts) and he realizes as he often states, that the problem is with the politicians/actuaries not the average teacher/cop/dpw worker who despite what you think are just as honest as people in the private sector. No more no less. We are all human beings.


    • Posted by Tough Love on March 7, 2014 at 3:56 pm

      I you have really READ my comments, you we see that I don’t “vilify the public employee”. Many many times I have stated that our Elected Officials are the primary cause of the financial mess we are in (along with substantial blame belonging to the Public Sector Unions for their insatiable greed).

      But, I have also made clear, that while the workers did not “cause” the problem THEY are in fact the FINANCIAL BENEFICIARIES of the Union/politician collusion which IS the cause … so THAT’S where the Taxpayers must look to remedy this injustice … by taking back these unnecessary, unjust, and grossly excessive promised pensions (and benefits).

      John, as an actuary, focuses on the PROPER actuarial role, to PROPERLY fund pensions per Plan provisions, and rightfully is pissed at the seeming support Plan actuaries have given to SERIOUSLY underfunding many Plans. I agree with this 100%. I’m sure that John understands my focus on excessive Plan generosity being the ROOT CAUSE of the problem, and on occasion he too has alluded to that and has agreed with me that future service accruals should be reduced.

      I believe that John and I are not in disagreement at all, but just have a different focus….. although kudos to John for having MUCH more patience than I with the nonsense/garbage that Public Sector workers put forth to try to justify their absurdly generous pensions.


  6. Posted by Tough Love on March 8, 2014 at 12:50 am

    John, I just scanned the PERS report. I wonder if BUCK does ANY reasonableness checking ?

    On PERS report page 61 there is a 17 year old with $105K salary and on Page 68 there are 3 workers OVER AGE 110 with current compensation.

    And the Normal Cost ……. astoundingly ridiculous (LOW).


  7. Posted by Javagold on March 8, 2014 at 4:07 pm



  8. […] the double-dipping non-issue I do not see Chrisitie allegedly steering investment contracts to campaign donors as the state […]


  9. […] the double-dipping non-issue I do not see Chrisitie allegedly steering investment contracts to campaign donors as the state […]


  10. […] do not see double-dippers as the problem but I do see how others would and how this resignation ties into what the Pension Study Commission […]


  11. […] at one of those villainized double-dippers (a policy most prevalent in political circles and that I do not see as a main reason for the pension crisis in NJ) but Patrick Colligan is an active police officer making a base salary of $121,066 which makes him […]


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