Rating State Pension Benefits

This started out as a quickie blog to get a simple point across about the underlying precept of New Jersey Governor Christie’s initiative to reduce public pension benefits, namely that the benefits New Jersey provides are overly generous.  Is that true?

Policypedia has a good compilation of official data from various sources but because there are no set standards among plans there is no easy way to compare benefits among state plans by only using asset and liability numbers.  You have to find the website where each state keeps their actuarial reports, go to the Summary of Benefits section of either the actuarial report or the CAFR, and see how those benefit formulas compare with what New Jersey’s is providing to most of its public employees (from page 44 of the PERS report: about 1.82% of pay times year of service at retirement age 60).

So I did and here are all the links to where the reports are by state and plan.  Actuarial reports all have a section that describes the benefit formula and after a review of a few plans I found….

a lot of state plans are more generous than what New Jersey provides:

  • Arizona: about 2.2% of pay times service at age 62 (page 90 of actuarial report)
  • Colorado: 2.5% of pay times service at age 65 (page 100 of actuarial report)
  • Illinois State: 2.5% of pay times service at age 60 (page 48 of actuarial report)
  • Minnesota General: 2.7% of pay times service at age 65 (page 34 of actuarial report)

Feel free to hit the links of whatever state plan you are interested in and see if you can find a plan that is significantly inferior in benefits to what New Jersey has.  I doubt you will find anything too chintzy which makes my point: Christie is attacking public employees and their benefits because the alternative is to attack the deadbeats and charlatans who choose to maintain a political spoils system at the expense of honoring their contracts.




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Public Employees (CALPERS)

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New Hampshire

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New Jersey

All Plans

New Mexico


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New York

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North Carolina

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Rhode Island

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West Virgina

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38 responses to this post.

  1. Posted by Tough Love on July 22, 2014 at 12:53 am

    John, I’m not surprised by your findings. A recent article summarized the same, with the “generosity” of NJ’s Plans just about mid-range for all states.

    But boy do I disagree with your conclusion … which seems to be that being mid-rage of PUBLIC sector Plans means that they are not too “generous”.

    I ask…. why is that your definition of “generosity” ?

    Isn’t a MUCH more appropriate test of generosity a comparison of “Total Compensation” (cash pay + pensions + benefits) in comparable PUBLIC and PRIVATE Sector jobs (or if not directly comparable, jobs with reasonably similar risks, experience and educational requirements, and skill sets) … especially with PRIVATE Sector taxpayers now being asked to fund 80-90% of the total cost of current Public Sector pension promises? Under THAT measure, with close “cash pay” (in most occupations) but FAR FAR greater pensions and benefits, the PUBLIC Sector comes out MUCH higher.

    E.g., why does the NYC Token booth clerk ROUTINELY earn in total compensation 2-3 times that of the typical bank teller?

    While I understand that in certain jobs (e.g., Police Officers) the comparison is with other employers of Policemen, but hasn’t the decades-long practice of Union campaign contributions and election support led to excessive total compensation (primarily via the pension & benefit components) EVERYWHERE ? We have to start somewhere fixing this because it’s simply unaffordable and grossly unfair to Taxpayers.

    In a prior post, I mathematically demonstrated that for a Private Sector worker to generate a pension with the SAME value as that of the typical California policeman, he would have to earn a salary over 4.6 times the pay of the police officer. In short, a CA Police officer TYPICALLY retires with a pension of the SAME value as a Private Sector worker earning almost $500,000 annually. Such Public Sector pensions should rightfully be called nothing but grossly excessive.

    And while the relationship is not quite as bad in NJ, assuming COLAs are reinstated, the lump sum present value of the TYPICAL NJ Police officer retiring at age 55 after 30 years of service is very near $2 Million…… of which only a few $100K came for the officer’s own contributions. Taxpayer funding of such pensions is patently absurd.


    • Posted by Anonymous on July 22, 2014 at 3:01 am

      TL always stooping to new lows. She vehemently attacks police officers and the military. Take away their pensions and benefits she says, they dont deserve them. She must be a moron. No contributions by the state into the pension system for years and she complains that she has been paying too much. She is a real fraud. Get ready for a drunken rant now! Here is comes!


    • Posted by LGreene on July 22, 2014 at 8:10 am

      1) If NJ’s unions were so ” almighty” then they would have one of the juiciest public fund plans in the country. Perhaps the benefits are not as ” extreme” as others seem to think. But this blog doesn’t compare how Final Comp is measured, unused sick time etc. are included in that calculation. But this is indeed a great help and resource.
      2) TL Statement on taxpayers paying 80-90% of the benefit seems to be flawed. She gives taxpayers credit not only for their contribution, but also for the investment returns of their contribution. That seems a little excessive and misleading. But it is true that taxpayers are 100% responsible for any shortfall, and that seems to be something that could/should be addressed.
      3) The comparison on public sector retirement benefits vs. private sector seems to indicate that private sector plans are poorly designed and don’t produce a secure retirement. I would be interested in some ideas on a better retirement plan for private sector employees instead of totally ” gutting” public sector funds. Parity would indicate that Private sector plans need a major upgrade as well as perhaps revisions of public sector plans to be less ” generous”
      4) Your equating of NYC token Booth attendant to ” typical ” bank teller ( in suburbia? rural America? ) bank teller shows some subjective evaluation on your part. There are major differences between the two. Spend a month doing both and you would see.
      5) One could say that comparison of CEO and Corporate compensation vs. their own employees and other public / non-profit employees is Way out of line, while private sector employees have an inferior retirement package. But PRIVATE companies ( even the ones that are publicly traded and have public employees as stockholders) are not under as much scrutiny as public plans.
      6) Using California as an example isn’t really helpful. This blog shows that EVERY State is different. Therefore each state has to have its own analysis done. You may have picked the State with the widest spread between public vs. private benefits.

      Having said all that , TL does a good job of not only being consistent in her thoughts, but sometimes providing the back up and sources of her beliefs. But some of the analysis seems a little extreme and probably wouldn’t survive thorough scrutiny. Too bad there is no real opportunity to compare, contrast, debate, and then perhaps promote a variety of solutions instead of blindly stating ” cut benefits, and go to 401(k)” . TL shows us that 401( k) is NOT the entire solution.


      • Posted by Tough Love on July 22, 2014 at 9:38 am

        Thanks for the reply … a few comments on your response:

        (1) If you were to create a spreadsheet and accumulate each (typical) public Sector employee pension contribution (INCLUDING investment earnings) to the date of retirement, you would find that the accumulated sum is rarely sufficient to buy more than 10-20% of the promised pension. The 80-90% balance is the “responsibility” assigned to Taxpayers …. even if the Taxpayers have been contributing less than that share assigned to them. And for Police, because of their richer formulas (mostly w/o commensurately great contributions) and because of their VERY young full retirement ages, THEIR paid-for share of the total cost of their pensions is typically closer to the 10% figure.

        (2) quoting …” The comparison on public sector retirement benefits vs. private sector seems to indicate that private sector plans are poorly designed and don’t produce a secure retirement. I would be interested in some ideas on a better retirement plan for private sector employees instead of totally ” gutting” public sector funds.”

        While that would be nice, with 85% of all workers in the PRIVATE (not PUBLIC) Sector it is THEIR compensation that sets the “standard” or “market rate” to which others should be compared … not the other way around. To say that (on average) 85% of the working population (i.e., the Taxpayers) is under-compensated by reference to the other 15% (i.e. PUBLIC Sector workers) would hardly pass muster in a scholarly discussion.

        (3) while the working environment of the bank teller is certainly much better than that of the NYC subway booth clerk, the difference in compensation simply cannot be justified by a comparison of all elements associated with the 2 jobs. Clearly the above market ( see my #2 response above) Subway token booth compensation (relative to the bank teller) is simply the result of elected officials agreeing to unnecessarily high Public Sector Union compensation demands.

        (4) Quoting … “One could say that comparison of CEO and Corporate compensation vs. their own employees and other public / non-profit employees is Way out of line”

        I couldn’t agree more ….. but using that injustice as part of an argument to justify unnecessarily higher Public vs Private Sector compensation (in comparable jobs) just doesn’t cut it.

        (5) In my initial comment I did state that CA was a more extreme example than NJ. So if instead of needing 4.6 times (greater Private Sector salary to get the SAME pension as the CA Police Officer) that multiple is only 3-3.5 times greater,in NJ, are you inferring that that is OK? I think not.

        As far is my statements not “survive thorough scrutiny” I’m willing to discuss anything that you believe may be incorrect.


    • Posted by Endalimony4ever on July 22, 2014 at 1:13 pm

      John, isn’t the standard what the public employees get versus the private sector? Public employees salaries for Teachers, Police, Fire, and administrative officer civil servants is now on average far above those of the private sector. In the old days when civil service was relatively low pay, one of the perks was a pension for life. Now that civil service pay is commensurate and in fact is higher than most private sector jobs we are stuck with the two headed hydra of High pay and High retirement and medical benefits. We as a society can no longer support a public service class that is living well beyond what the average private sector citizen can afford to pay!


  2. Posted by Anonymous on July 22, 2014 at 2:54 am

    Feel free to hit the links of whatever state plan you are interested in and see if you can find a plan that is significantly inferior in benefits to what New Jersey has. I doubt you will find anything too chintzy which makes my point: Christie is attacking public employees and their benefits because the alternative is to attack the deadbeats and charlatans who choose to maintain a political spoils system at the expense of honoring their contracts.


  3. John, you are making comparisons between the states. As we know, many states are having the same difficulites as NJ due to public employee legacies, pensions, health benefits, etc. among other things. How about a blog on the comparison between the the public worker and the private worker both in similar occupations. I believe there was an article by Steve Cordasco, Temple professor and financial consultant, which demonstrated that even a typical public worker makes out better than the private business owner making 400k a year. He takes into account many different aspects besides salary and retirement. I will try to find the article and post it here.


  4. For anyone who is interested goggle “Tax Fairness and the Small Business Owner” from 10/19/12 written by Steve Cordasco. Interesting comparison.


  5. Another thought, although some states are equal to or less than the amount of pensions paid to public employees, those states have much lower taxes especially real estate taxes. How is that taken into account? For example AZ and IL are more generous. We know that IL is going over the cliff but tazes in AZ are much, much lower all around than NJ. How is that taken into account?


  6. Posted by Anonymous on July 22, 2014 at 9:41 am

    TL is a greedy CEO of a company who want to keep her employees saddled with extremely poor retirement pension and benefits while she take a retirement fit of a king at their expense.


    • Posted by Tough Love on July 22, 2014 at 9:49 am

      Let me guess …. you’re the same “Anonymous” that commented above (time-stamped July 22, 2014 at 3:01 am) ?

      The readers wait with baited breadth for you next insightful contribution ….. as I’m sure does your employer does, every day.


      • Posted by Endalimony4ever on July 22, 2014 at 1:17 pm

        TL, it is not going to matter anyway. The public can no longer afford to support the Rolls Royce benefits of the public sector. The Pensions are going to fail and the sooner they do the better for all. People are moving out of the state very quickly. One of my neighbors just informed me he and his wife are moving to Florida as soon as their house sells. BTW, He is a wealthy individual who can afford two homes.
        The funny thing is the state workers are moving out too! Further decimating the tax base. We really are Detroit redux!


        • Posted by formerjerseyan on July 22, 2014 at 6:49 pm

          I think, unfortunately, that more than the pensions will have to fail for the politicians of the Northeast to truly understand the mess they have created. Without the ability to coin money, these states are going to be begging Uncle Sam for a bailout. In the meantime, leaving NJ before Christie leaves office and a pro-union marxocrat comes into office is a very prudent choice – even if it means taking a paycut and moving to Texas or SC.


      • Posted by Anonymous on July 22, 2014 at 1:24 pm

        TL might as well be anonymous, after all nobody knows her name or even if she is a female. She does not want anyone to know who she is. But we know one thing she is running a sweat shop so she can become rich. And she is so greedy she does not want to part with one penny of her ill gotten gains.


        • Posted by Tough Love on July 22, 2014 at 4:00 pm

          Quoting …”she is running a sweat shop so she can become rich”

          More brilliant commentary on your part … as expected.


  7. The level of the DB is not important. The level of funding is what is important.


    • Posted by Tough Love on July 22, 2014 at 12:18 pm

      Hogwash. Excessive Public Sector pension “generosity” is the ROOT CAUSE of States and Cities financial problems …. and “funding” FOLLOWS directly (and in proportion to) generosity.

      Materially reduce that grossly excessive pension “generosity” (everywhere) and given sufficient time and (should we be so lucky) a steadily growing economy, and we MIGHT we able to work through these major financial problems.


      • Posted by formerjerseyan on July 22, 2014 at 6:43 pm

        TL, I have raised the issue of taxing the net present value of public sector pension and health care benefits as they are “earned” as opposed to after retirement (at which point many of them leave the state for NC, SC or FL).

        If this were done, and done based on the amount the employer has to kick in to fund said benefits according to SOUND actuarial practice, then the plans might either cease to be a drain on the taxpayers or the workers who “earn” them would clamor (based on having zero take home pay after paying said taxes) to get out of them and go to a DC plan.

        It is all a matter of tax policy. The marxocrats in this state are the masters of this approach – using taxes for example to make cigarette smoking a luxury.


      • Posted by Pat on July 22, 2014 at 6:45 pm

        Root cause? What a pile of BS, since the state has not yet paid any significant amount into the plans. If anything, spending the pension money on tax reductions, rebates and palm greasing should have stimulated the economy.


        • Posted by formerjerseyan on July 22, 2014 at 6:51 pm

          The public sector ticks have not paid any “significant amount” either. The fallacy of “thinkers” like Pat is that they presume that if NJ HAD been paying into the plans, that the hole in the budget would not have brought out the angry citizens and pitchforks YEARS ago – at which time the plans would have been ended. There is a reason you don’t poke a stick into a hornets nest.


        • Posted by Tough Love on July 22, 2014 at 7:02 pm

          However you shake it, for you to get the grossly expressive pensions you have been “promised”, 80-90% of the total cost will fall on Taxpayers …. because your own contributions (INCLUDING all investment returns thereon) will only buy 10-20% of their total cost …… whether they pay it yesterday, today, or tomorrow.

          Your pensions are simply too “generous” and THEREFORE too costlt to fully fund (short of YOUR share of the cost rising to 50% …. and you’d STILL be getting a better deal pension-wise than almost all Taxpayers). Which of course is why that funding isn’t happening …. we don’t have the money now, and never will. The SOONER you face that (and agree to VERY material 50+% pension reductions) the greater the change that ANY part of your pensions & benefits can be salvaged. Math ALWAYS trumps politics.


          • Posted by Anonymous on July 23, 2014 at 4:00 am

            The only result of a 50%+ reduction as suggested by TL will be the ever expanding welfare state which working taxpayer fund at an ever increasing rate.

  8. Posted by Javagold on July 22, 2014 at 11:46 pm

    Fuck all the public takers !!!


    • Posted by Anonymous on July 23, 2014 at 12:48 am

      Fuck you very much


    • Posted by Anonymous on July 23, 2014 at 7:23 am

      TL must be proud that you are on her side!


      • Posted by Tough Love on July 23, 2014 at 8:16 am

        “On my side ” ? This isn’t a contest.

        How can anyone OTHER THAN those on the receiving end of the grossly excessive Public Sector pension & benefit PIG-FEST support it ?

        The Public pension alone are TYPICALLY 3x-4x greater in value at retirement than those granted Private Sector workers, with the Taxpayers (NOT the workers) being assigned 80-90% of the total cost of these Plans.


  9. It wasn’t that long ago that I was earning $8.25 per hour as a bank teller while the turnpike toll takers were making more than $19.00 per hour. My job at the bank was much more complicated that a toll taker who does nothing but make change and the computer tells him how much change to provide.


    • Posted by Tough Love on July 23, 2014 at 8:37 am


      (1) I’m sure the Toll-takers heathcare package was much better and cheaper than yours, and
      (2) if they worker their for a career, they would likely get a pension replacing 2/3 of their pay (COLA-increased annually) for life as well as free or heavily subsidized retiree healthcare.

      The typical 401K employer “match” for the bank teller would certainly replace less than 1/4 of their final earnings (with no COLA adjustments) and there is no way they would get any substantive retiree healthcare benefits.


  10. Posted by Tough Love on July 23, 2014 at 8:55 am

    John, As a follow-up to my original comment …. the 1-st comment on this post….

    Under the logic that you seem to be using, that Public Sector Plan generosity should (or at least can) be measured against other PUBLIC Sector pension Plans, consider the following:

    Suppose (as I find the situation to be today) that Public Sector Plans are ON AVERAGE 3x-4x greater in value at retirement than those granted comparable Private Sector workers. Further assume that that 3x-4x RANGE is from 2x-5x with NJ’s Plans right in the middle at 3.5x greater.

    Now, lets assume that while Private Sector Plan remain unchanged (in their “generosity”), all PUBLIC Sector Plans DOUBLE the generosity of their Plans, with the new average multiple vs Private Sector Plans being 6x-8x greater and the range being 4x-10x , again with NJ being right in the middle at 7x greater.

    Under your logic, NJ’s PlUBLIC Sector Plans would still not be excessive. I not only trust that you see the flaw in your approach, but this is not as far fetched as one might think (although to a lesser extent). In 2001 in California via SB400 (and similar Local laws) most Public Sector pension Plans were RETROACTIVELY increased by 50%…. and almost all CA Gov’t entities implemented these change.

    Your logic would suggest that there was no CHANGE in the level of “generosity” because you are ONLY comparing a single Gov’t Plan to the universe of other Gov’t Plans, and ignoring the generosity of Private Sector Plans.


    • Posted by Pat on July 23, 2014 at 5:37 pm

      Tough Love, if you really believe in your premise, why dont you write it up with some REAL numbers giving a REAL comparision of public and private plans and post an abstract here. Im sure you will get comments. Myself, im really tired of hearing about those multiples you expound blog after blog after blog after blog…. pb


      • Posted by Tough Love on July 23, 2014 at 9:38 pm

        Ok Pat, per your request (see below ….. something I posted a while back). The 4.62 multiple for the CA police officer (shown below) would likely be closer to 3.5-4.0 times in NJ due to a somewhat lower (but still grossly excessive) pension formula. It also assumes that the COLAs will be reinstated. Enjoy !

        In California the typical recent Pubic Safety retiree’s pension starts at just about $100,000 and is COLA adjusted thereafter. By looking at a table of life annuity factors, such a single life immediate annuity has a value or cost upon retirement of just about $1.8 Million (18 times the annual pension). One way to judge if that is reasonable (or “appropriate and fair”) is to answer the question … What would be the necessary INCOME LEVEL (or Final Average Salary … FAS) of a Private Sector worker with the TYPICAL Private Sector DB pension (for the few Private Sector workers lucky enough to still be covered by such a pensions) to obtain a pension from his/her employer with the SAME $1.8 Million “value” upon retirement ?

        Assume the CA safety worker has the typical 3% of final average pay per-year-of-service pension factor, had a final average salary of $111,111, 30 years of service and retired at age 55… resulting in the starting pension of $111,111 x .03 x 30 = $100,000. Next, let’s assume the Private Sector worker’s DB pension formula is 1.25% per year of service (a quite typical formula), is NOT COLA adjusted (routine in PRIVATE Sector Plans), and has a full unreduced retirement age of 62 (with a 4% reduction in pension payout for each year of age that you retire begin collecting your pension before age 62).

        For a given Final Average Salary (FAS), this Private Sector worker’s annual pension (P) is given by the formula P = (FAS x 30 x .0125)x (1-((62-55)x.04)), with the latter part of that formula being the adjustment for early retirement at age 55. Shortening that formula, we have P = (FAS x 30 x .0125) x 0.72.

        From above, we saw that the Safety worker’s pension (being COLA-increased) has a lump sum “value” of 18 times the annual STARTING pension. With no COLA increases, the lump sum “value” is only 13 times the annual pension. Therefore the Lump Sum “value” of the Private Sector worker’s pension is given by 13 x P, and since we are SETTING that value equal to the $1.8 Million value of the safety worker’s pension we have $1,800,000 = 13 x P, and solving for P, we have P= $1,800,000/13 = $138,462. This Private Sector non-COLA-increased annual pension of $138,462 can be looked at as being mathematically equivalent to an otherwise identical pension starting at $100,000 that includes 3% annual COLA increases (i.e., the Safety worker’s pension).

        Now since we know the annual Private Sector worker’s annual pension “P”, we can plug it into my above formula of P = (FAS x 30 x .0125) x 0.72 to solve for FAS. Doing so we have, $138,462 = (FAS x 30 x .0125) x 0.72, from which

        FAS = $138,462/(30 x 0.0125 x 0.72) = $512,822

        What this shows is that a Private Sector worker (with a TYPICAL DB pension formula and provisions) would need to have a final average salary of $512,812 to generate a pension from his/her employer with the SAME $1.8 Million “value” as the TYPICAL Safety worker pension …. or $512,822/$111,111 = 4.62 times the Safety worker’s salary.

        And for the skeptics that say …. this can’t be correct …. we can just reverse the order of calculations and SHOW that this $512,822 PRIVATE Sector salary is indeed necessary to generate a pension with a “value” equal to that (the $1.8 Million) of the Public Sector Safety worker … as follows:

        (a) Private Sector worker’s Annual (non-COLA-increased) pension = $512,822 x 30 x 0.0125 x .72 = $138,462
        (b) Lump sum value (using the 13 times life annuity factor applicable to non-COLA-increased pensions) = $138.462 x 13 = $1.8 Million

        While most reasonable people would suggest that (give the nature of the occupations) Safety workers should receive pensions equivalent to Private Sector workers with salaries say 10% or 25% or 50% greater than they, I find it incredulous to believe that ANYONE would feel it appropriate to provide the TYPICAL CA Safety worker retiree with a pension equivalent to that of the Private Sector worker making over $500,000 annually. Taxpayers (who pay for all but the 10-20% of Total Coat Public Sector pensions typically paid for by the worker’s own contributions and the investment earnings thereon) simply cannot afford anything even remotely close to this level of generosity.

        And to preemptively address the anticipated comeback ………… the 4.62 times greater CA safety pension is NOT a function of the Officer’s final pay. It would remain 4.62% even if the officer’s final pay (and hence starting pension) were 10%, 20% or even 50% lower.

        The 4.62 time greater CA Safety worker pension results from the MUCH richer Formula and MUCH more generous “provisions” as follows:

        (1) Benefit from the richer “formula” of 3% vs 1.25% = 3.00/1.25= 2.40 greater
        (2) Benefit from only the CA safety worker getting COLA increases = 18/13 = 1.3846
        (3) Benefit from no CA Safety worker pension reduction for full (unreduced) retirement at age 55 = 1.00/0.72 = 1.3889

        The above beneficial ratios are multiplicative, giving the overall advantage of 2.40 x 1.3846 x 1.3889 = 4.62 times.


        • Posted by Pat on July 23, 2014 at 11:26 pm

          I am trying to understand this, but being a simple public employee with a MS degree not in accounting puts me at a disadvantage. Here are some thoughts:
          1- You are cherry picking the most expensive participants in the most expensive plan in the country. This blog is on NJ, so use NJ statistics where the employees dont retire at 80-90% of a high salary.
          2- You make lots of assumptions. What are your datasets, especially for private employee pensions.
          3- Most private employees get their DB plan paid for by the employer. How does this figure into your calculation?


          • Posted by Tough Love on July 23, 2014 at 11:43 pm

            Well, replace the CA formula of 3% per year of service with the Police formula in NJ and re-work my calculations. Should be pretty easy for someone with a Masters degree.

            As for cherry-picking, didn’t I say RIGHT UP FRONT that the 4,62 multiple in the CA workup would likely come out between 3.5 and 4 times due to the lower NJ pension formula ?

            Actually, this work-up well overstates what most Private Sector workers would get today because I assumed what would have been a typical Private Sector DB pension formula, but fewer and fewer Private Sector workers are accruing benefits under DB Plans today. Most Private Sector workers get nothing more than a very modest 3-5% of pay employer “match” towards their retirement….. yielding a life annuity perhaps half that of the Private Sector worker in this demonstration.

            As for …”Most private employees get their DB plan paid for by the employer.”, no most Private Sector workers don’t get ANY DB pension plans at all.

  11. Posted by AnonymousinEssex on July 31, 2014 at 9:29 pm

    I think the relevant comparison isn’t what percentage of final salary retirees get, but the average annual payment.

    If the average Arizona retiree made $50,000 a year and gets 2.2% for 25 years of service he or she would get $27,500 a year.

    Salaries are higher in NJ, so if a NJ retiree made only $60,500 at retirement he or she would get more money than the Arizona retiree.

    I don’t know what the salary differential is between AZ and NJ, but I think that it could be more than $10,000.

    Anyway, it’s average payment per employee that matters from a fiscal POV, not the percentage of final salary.


    • Posted by Tough Love on August 12, 2014 at 3:37 am

      Your wrong….. your example ignores that Public Sector workers TYPICALLY retire and can often collect unreduced pensions 10 years earlier than Private Sector workers (increasing the pension’s “value” by a multiple of 1.5 or more), and while PUBLIC Sector pensions routinely included annual post retirement COLA increases, Private Sector pensions almost never do (increasing the value by another multiple of 1.33 on average).

      So, even if the beginning $ pension payouts for the Public & Private Sector workers were the same, on average (because of the much earlier retirement age and the COLA increases ) the PUBLIC Sector pension have a greater value by a factor of 1 x 1.5 x 1.33 = 1.995.

      And, since PUBLIC Sector pension “formula factors” are very typically DOUBLE those of the few Private Sector DB Plans that still grant benefits (even though you seem to be arguing to ignore that reality), when combined with the above 1.995 multiplier advantage, the Total Public Sector value advantage is 1.995 x 2 = FOUR times greater.

      THAT’s the facts as they stand RIGHT NOW …. and boy is it WAY pay time for this financial mugging of the Taxpayers by the greedy Public Sector Unions/workers (and our self-interested Union bought-Off politicians) to end.


      • Posted by AnonymousinEssex on August 20, 2014 at 11:12 am

        I never said that public sector pensions were fair compared to private sector pensions. I agree that they are not fair (or affordable) and should be reduced.

        I was only making a point about comparing public sector pensions between different states. I used Arizona and NJ as hypothetical examples. I think the raw amount per retiree is the better measure, not percentage of final salary. One could also argue that an important measure is pensions as a percentage of state economy. Since Arizona has had stronger growth over the past few decades than NJ its pension system would be more affordable.


  12. Posted by M.D. on February 6, 2015 at 8:14 pm

    Have noticed on radio talk shows that callers complain about government union dues, and it they were to get a union job that they would have to pay into a pension. In the same breath, they say that it’s unfair that employees receive pensions. This irrational sour grapes attitude assumes that, in my case, retired MN
    state employees received extravagant wages and the state contributed too much to the pension.
    As a Clerk II in 1975, I started at $2.50/hr. In 1990 the start was $9.00. When I was laid off by Pawlenty in 2003, I was a Customer Service III, with over 21 years with the state in various departments and over 30 years of clerical/customer service experience in the state, private sector, counties and federal. Was making $16/hr. and the start for II was probably $10 and for III $12.

    They are assuming that they are now paying for the money I receive. Every pay period a, very small amount was contributed by the state in lieu of decent wages, and by me. The; money I now receive is due to money accumulating over time.
    Some benefits are: I receive about the same as my Social Secuirty check so don’t have to ask for any government assistance. I create jobs, and in Minnesota because I spend all the money, and do it locally.
    The callers are the same hotshots who buy hjigh and sell low. They want their social security privatized so they can get their million dollars, or lose it as in 2008. By receiving the money over decades, the principal is allowed to continue growing.


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