What you notice after Chris Christie brags about pension reform in his state of the State address this afternoon:
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.
No applause, as the same tired sophistry is trotted out. The truth is that under Christie all we got were….
….six more wasted years with no real reform (especially if/when COLAs return) and a shift to junk assets that have left default as the only viable option. Any public employee who still believes otherwise only needs to listen closely to this rant:
.
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The right answer would be ‘campaign donors’ but nobody in that room entertains that as a possibility so it will wind up being either pensioners or bondholders who won’t be ‘pandered’ to.
Burypensions Blog 
Posted by Anonymous on January 12, 2016 at 9:25 pm
Hey TL Christie paid almost 1billion in fees to brokers
Posted by Anonymous on January 12, 2016 at 9:30 pm
That broker payment replaced the reform required pension payment.
Posted by Now retired Pat on January 12, 2016 at 9:34 pm
i do believe (hope) the NJ state taxpayers will accept the responsibility that is theres’ to make a constitutional amendment to pay the fair share. If they do not, I will move to Florida. Fuck NJ!
Posted by Sean on January 12, 2016 at 9:50 pm
“i do believe (hope) the NJ state taxpayers will accept the responsibility…”
Pat, I understand your feelings, but I also feel that taxpayers in general have accepted FAR too much of the burden, for FAR too long, for FAR too little in return. And for THEM? Where are the taxpayers’ generous, secure, come-hell-or-high-water you will get paid either way, pensions? Anyone? Anyone? Bueller? Bueller?
I think the taxpayers are the ones who REALLY should be saying, “F**K NJ!”
Posted by Tough Love on January 12, 2016 at 9:59 pm
Now retired Pat,
You can run, but you can’t hide. WHEN (not IF) NJ inevitably reduces it’s Public Sector pension payouts, it won’t matter that you’ve moved away.
And how grotesque of you to bring up the “fair share” argument. NJ;’s Public Sector workers contribute a pittance toward to TRUE total cost of their grossly excessive pensions & benefits ….. even AFTER inclusion of the earning on those contributions.
Posted by PSDrone on January 12, 2016 at 10:58 pm
Move
Posted by Tough Love on January 12, 2016 at 9:51 pm
The pension-takeaway from Christie’s 2018 State of the State Address:
———————————————————————————–
“Will you support practical, common sense ideas that the vast majority of people believe in and need us to do; or will you go for short-sighted, politically motivated, fiscally reckless policies which will destroy our state? In the process, we will drive citizens out of New Jersey.
How will we drive citizens from our state? What irresponsible policies am I talking about? Let me be very clear about the course you may pursue and the cost to our state and our citizens.
You have begun the pursuit of a constitutional amendment to guarantee pension payments over all other types of state spending. Ahead of funding for our hospitals. Ahead of support for our colleges and universities. Ahead of taking care of people with disabilities. Ahead of paying for Medicaid. Ahead of rebuilding our roads and bridges. Ahead of jailing criminals. Ahead of replenishing our beaches. Ahead of feeding the most needy. Ahead of protecting our children from abuse. Ahead of helping children with autism and funding cancer research. Ahead of paying for homeland security for New Jersey’s mass transit system. How can I say that?
Because none of that spending is guaranteed by the Constitution. All of those issues; education, health care, crime, our environment, support for the poor, protection for our children would be subject to elimination to pay for the pensions of 800,000 current and former public employees. The health, welfare, security and success of the other 8.1 million New Jerseyans become second class concerns; pensions reign supreme. 8.1 million New Jerseyans would become second class citizens. Public pensioners would be a special class of citizens whose retirement is protected above all other public concerns. Protected from recession. Protected from natural disaster. All of that would be in line behind union negotiated pensions – way behind.
If you say no, never – that you would never eliminate that spending to pay for pensions. Never hurt people with disabilities to protect pensions. Never deprive our students to protect pensions. Never diminish health care to protect pensions. Never let criminals leave prison early to protect pensions. Never let our roads and bridges crumble and fall to protect pensions. Never let people go hungry – never let children fall into abuse.
Then, there is only one road you can travel down to avoid the brutal spending cuts that will deprive New Jerseyans of all those things and more. Unfortunately it is a road many of you have traveled down before. Now I will tell New Jerseyans what that road will look like for them.
To pay for this constitutional amendment and not savage the lives of all New Jerseyans, needy and hopeful, hardworking and retired, you must impose a massive tax increase on New Jersey citizens. How massive? It will require $3 billion to pay for your amendment.
I want to ask each of you who voted for this amendment just 24 hours ago – who are you going to steal this money from in New Jersey? Please don’t say millionaires; don’t further insult the intelligence of New Jerseyans. Your millionaires tax raises only $600 million.
Where do you get the other $2.4 billion? Get ready New Jersey because there is only two ways to do it. You must increase the sales tax from 7% to 10%. A 10% sales tax in New Jersey is unconscionable. It will kill New Jersey retailers and store owners. It will disproportionately hurt New Jersey’s middle class and the poor.
You say you would never do that? Well, then, only one option left – raise the income tax 23% on all 3.7 million New Jerseyans who pay that tax. How about that New Jersey? 23% more of your money to Trenton? To pay for pensions? Show of hands in this room from those of you who voted for this amendment. 10% sales tax? 23% increase in the income tax? New Jersey is watching – let them see now, well in advance, how you are going to take their money from them to repay your union bosses.
This is the truth of your choice and you know it. To pay for gold plated pensions and platinum health benefits for a chosen, constitutionally protected few. To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right? Are you going to tell New Jersey the truth about your vote yesterday?
The NJEA alone has given the Democratic party $30 million in donations to their campaigns and PACs over the last two years. Are we supposed to believe those donations and your vote to make them the only constitutionally protected recipients of taxpayer money in New Jersey are not connected? $30 million from the NJEA for you in return for $3 billion in tax increases for all New Jerseyans: what a deal.
We must tell New Jersey the truth. This is the road to ruin. Our non-partisan commission put forward an alternative that would avoid this calamity for our state and this injustice for our taxpayers. Stop this before it’s too late. We cannot deny funding for health care, education, criminal justice, the poor, our environment, our children and our infrastructure to pander to pensioners. We cannot soak every taxpayer for the benefit of the privileged few. I will lead Republicans and Independents to say no to this outrage – will legislative Democrats join us? And if you won’t, how will you explain this to our fellow citizens? You can count on the fact that I will – because I just did.
New Jersey is counting on all of us to make good things happen and to stop the bad ones in their tracks. So let’s talk now about the other priorities we need to focus on for the year ahead. Let’s roll up our sleeves again and put the public interest ahead of special interests and the status quo.”
Posted by Anonymous on January 12, 2016 at 10:22 pm
Frankly–he is telling the truth–like him or not.
Posted by Tough Love on January 12, 2016 at 11:42 pm
I have grown to like him less (mostly for abandoning NJ to campaign for the residency), but admire him for his strong stance on the HUGE problem NJ has with it’s Public Sector pensions & benefits …. that being that material BENEFIT LEVEL reductions (preferably a freeze) must come BEFORE we consider additional funding, without which additional funding of the current grossly excessive pension/benefit “promises” will go nowhere.
Posted by Anonymous on January 13, 2016 at 11:08 am
John what on earth do you say to a person who believes Christie is telling the truth?
Posted by burypensions on January 13, 2016 at 11:27 am
What those few people are likely to be hearing most these days:
‘The nurse will be here with your thorazine shortly’
Posted by Anonymous on January 13, 2016 at 2:04 am
The State of NJ is the sponsor of pensions for 800,000 public employees. There are state and federal laws governing employment. CC increased the problem by not paying the pension payment, his decision. Now the reality of a bad past decision is apparent, he blames public employees. By law the money in the pension trust fund is for “the exclusive benefit” of retirees and their beneficiaries”. His speech was an appeal to potential voters nationwide. He is a failure and a political disaster who is shortsighted.
Posted by Sean on January 13, 2016 at 2:41 am
“Now the reality of a bad past decision is apparent, he blames public employees.”
And what do you say about the bad decisions that were made for years and years and years, namely, the promises that could never be fulfilled. Why do you public sector people NEVER, EVER, come to admit that the promises were, and are, WAY out of line? Why?
Posted by Anonymous on January 15, 2016 at 11:55 pm
Because the state never, never, never, has paid into pensions. It’s almost all the employees contributions now. When a state can walk away from its obligations, how can the public trust that it will honor any obligation?
Posted by Tough Love on January 16, 2016 at 12:58 am
Quoting ….
“Because the state never, never, never, has paid into pensions.”
What are you smoking ???
Posted by Anonymous on January 12, 2016 at 9:53 pm
how do people believe his crap
Posted by Sean on January 12, 2016 at 10:31 pm
Ahh yes. The detailed, factual rebuttal. Attack the messenger all you want (I have no love for Chris Christie, as I live in Illinois), but what DO you say to it? Please answer this one:
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
Really. Please tell me how you would look taxpayers in the face and explain this to them. I’d really like to hear an actual ANSWER from respondents like you.
Posted by Sean on January 12, 2016 at 10:35 pm
Really. Any of you publics want to answer THIS,SPECIFIC, question? Anonymous? Nutcase? TruthNolie? Mr. Bwahaha? Or is it time for SMD to come to the rescue with one of his patented drive-by smoothings?
Posted by PSDrone on January 12, 2016 at 11:15 pm
Don’t hold your breath Sean. Remember those you call out are all members of the cult that has been partaking in and promoting grand larceny on the taxpaying, non drone-job holding citizens of NJ for the past 40 years. They cannot respond to questions about what is fair, just and logical. They can only continue to scream for what is good for them. No better than criminals as far as I am concerned.
Posted by Sean on January 12, 2016 at 11:47 pm
Your description for them is harsh, but unfortunately…true.
The whole thing, to me, is simply this: The relationship between public sector unions and politicians is an unnatural, unethical, and should be, an illegal one. It really is that simple. The primary motivation behind almost every evil done under the sun can be summed up in two words: buying votes.
When people are promised something, no matter how insane or impossible to deliver, it becomes THEIRS, and THEY “earned” it, and anything you do to try to bring it back to reality is seen as a direct attack on THEIR money.
Posted by Tough Love on January 12, 2016 at 11:52 pm
Well stated, and support my advocacy:
(1) End the DB Plans for the FUTURE service of all CURRENT workers and replace with DC Plans with a taxpayer contribution EQUAL TO that typically granted Private Sector workers by their employers
(2) Reduce both active and retiree healthcare to a level EQUAL to that typically granted Private Sector workers by their employers …. typically a ZERO subsidy once retired.
(3) BALANCE the need to reduce PAST service pension accruals with the level of tax increases needed in the absence of such reductions ….. keeping in mind that the “formulas” and “provisions” that generated those PAST service accruals were ALSO grossly excessive.
Posted by Anonymous on January 13, 2016 at 2:14 am
Delusional nonsense, “cult” members really, Public employees are not “cult” members.
Posted by Anonymous on January 13, 2016 at 2:11 am
Sean, Sean, you are spewing hateraid.Stop blogging, commenting and apply for a better job with a hybrid pension plan.
Posted by Tough Love on January 13, 2016 at 3:17 am
Quoting …. “spewing hateraid”.
“Spewing” huh. Is that a new form of Gatorade ?
Posted by The Resident Nutcase on January 13, 2016 at 8:22 am
Sean,
It’s called deferred compensation. When an employee works in a job that they take, instead of making large salaries..they instead make a bit less now so that they will collect a pension later. The amount they pay into it is really no great secret. The entire premise relys on the simple fact that…. You make less now…. But get a pension later!!!
All this equal and fair is just BS!! We do not live in North Korea. We are allowed to decide which path to take. You sean, left the public sector because you thought you would be compensated more in the private sector. Apparently you were not…. So now you’re angry.
Posted by dentss dunnigan on January 13, 2016 at 1:07 pm
so you belong to this state deferred compensation plan(NJSEDCP),which has nothing to do with the pension .That’s your money and nobody can take it from you .http://www.state.nj.us/treasury/pensions/njsedcp.shtml
Posted by Anonymous on January 13, 2016 at 2:08 pm
Wrong, it’s still a option or supplemental plan under the NJ DIVISION OF PENSION AND BENEFITS. Every state employee can have a supplemental account under DROPS and ACTS. Once vested all pensions are protected “exclusive benefit” clause.
Posted by Anonymous on January 13, 2016 at 2:19 pm
Any employee in any state sponsored pension plan is eligible for DROP and ACTS .
Posted by Sean on January 13, 2016 at 1:14 pm
Right. Keep telling yourself that, Nutcase. Actually, it seems that you are the only angry one here…
So, do you have an actual ANSWER to the question:
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
Do you remember, not too long ago, how you laid into me about the teacher’s pension you THOUGHT I was getting, and how you railed against the fact that I paid SO LITTLE into it and got WAY TOO MUCH in return?
Do you remember that, Nutcase?
Posted by Now retired Pat on January 13, 2016 at 9:13 pm
Perhaps the “teacher” who accepted the promise of tomorrow for a lower wage today could instead have risked his/her future as a wall-street trader and (perhaps) make $400K per year. Or, perhaps he would be fired when the economy tanked. Who knows? But instead of taking the “risk” he opted to take the promise fully knowing and counting on the eventual $2.4 million in pension payments (IF he actually lives to be 85)! I don’t really see that as being greedy. I see that as a contemplative, sound risk-averse decision based upon the “guarantees” of the State. If the State “lied” and could not come through on their end, that is the State’s problem. The State (i.e. the taxpayers) should have voted out the “liars” years and years ago. Don’t blame for trying to cash a check that the State can no longer afford! I play by the rules! YOU SHOULD TOO!!
Posted by Tough Love on January 14, 2016 at 2:39 am
Quoting Now Retired pat …” If the State “lied” and could not come through on their end, that is the State’s problem.”
No ….. It’s YOUR problem.
Posted by Anonymous on January 16, 2016 at 12:07 am
Your math doesn’t work $126k in pension contributions implies lifetime earnings of 14x that or about 1.5 million. Over 30 years is $50,000/yr. pension at 30/55 of 50k is $27,000 a year. To get a 2.4 million pension benefit the employee would need to collect for 88 years making them over 140 years old!
Posted by Pauline Walnuts on January 13, 2016 at 12:05 am
How about the 3rd, unspoken option for funding? His committee suggested returning the responsibility of funding the teachers pensions to towns in exchange for reduced healthcare costs. When his reforms were passed five years ago he said the employee contributions would help fix the system. When the policy rates go up 8-12% every year increasing the employee contributions does not really help. It just bought the insurance companies five more years of increases. Now we are supposed to accept his new math that further cuts to employee healthcare will offset the burden of the teachers pension contributions to the local taxpayer? He should not be trusted by anyone at this point.
Posted by Tough Love on January 13, 2016 at 12:21 am
It would be financial suicide for NJ’s localities to assume the financial obligation for any PAST or FUTURE service pension or healthcare obligations that are now an obligation of the “State” of NJ.
It’s patently absurd to accept as reasonable that Local savings arising from a reduction in healthcare subsidies would be sufficient to offset the cost of picking up responsibility for FUTURE* Service pension accruals …… in each and every year in the future.
* for Localities to take-on the liability for PAST service accruals would be impossible, because the STATE of NJ would have to transfer to the Locality CASH equal to the unfunded liability (calculated using CONSERVATIVE assumptions) ….. cash that the “State” of NJ does not now have.
Posted by Anonymous on January 13, 2016 at 2:27 am
Seriously TL, once vested the contributions belong to the employee, if the decision was made to return pension responsibility to localities, each employees vested amounts would be transferred to the new local scheme, it’s the law, “exclusive benefit.
Posted by Tough Love on January 13, 2016 at 3:24 am
And what City/Town/Village/Borough/Township or Plan administrator WITH A BRAIN would agree to accept 30 cents real assets to fund each $1 in PV of expected future payouts ?
Posted by dentss dunnigan on January 13, 2016 at 10:35 am
TL …30 cents still seems on the high side ,we have yet to see the real mark to market for hedge funds ……
Posted by Anonymous on January 13, 2016 at 2:11 pm
If the legislature enacts a law to return local pension administration to locals, local officials will have no choice.
Posted by Sean on January 13, 2016 at 12:06 am
And to those who think TL’s ideas are too brutal and harsh…wait until you see how much pain the current plan of “extend and pretend” is going to deliver.
Posted by Tough Love on January 13, 2016 at 12:23 am
Yes, they still insist “Equal but not better” is brutal and harsh.
Posted by Anonymous on January 13, 2016 at 2:18 am
Sean you have no influence here, man up, get a better job upgrade your job and compensation, you are angry because you made a personal decision to take a low paying job. Find another job.
Posted by Sean on January 13, 2016 at 1:17 pm
So, do you have an actual ANSWER to the question:
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
The personal attacks are lovely, but you still have not answered the question…
Posted by Anonymous on January 13, 2016 at 2:14 pm
Obviously the pension schemes were negotiated legally and have decades of implementation, so yes it valid, correct and legal?
Posted by Anonymous on January 13, 2016 at 2:16 pm
The pension payment is an annuity from a trust fund.
Posted by Tough Love on January 14, 2016 at 2:46 am
Brilliant answer, sort of like ….. an apple is a fruit.
Posted by Now retired Pat on January 13, 2016 at 9:20 pm
I answered this previously. All we can do is play by the “rules of the game”. Seriously unfair to change the rules when the game is almost over! $2.4 million is not sufficient to cover the opportunity Cost (loss) of NOT being a wall-street trader, or small-business owner, or ad infinitum.
Posted by Tough Love on January 14, 2016 at 2:48 am
Wow, stretching just a wee bit …. wouldn’t you say ?
Posted by The Resident Nutcase on January 13, 2016 at 8:32 am
Sean, TL…. Whoever you are…..
I’ve figured you/you two out!!
You were the kids that never really achieved anything. You always lost. You never were a winner. You were those angry kids!!! How come I never win? You cried!!!
Today… You get to cry on a blog!! But now you and your minions have some numbers!! You see, not everyone can win. So, instead of working harder… Trying more!!! You simply cry and you win.
You are the generation that will destroy this country. You raise your kids the same way!!!
You preach.. Equal… Fair!! Not better. Yet you relish in the fact that “you can’t wait” for the “others” to lose what they worked hard for.
You are systematically breeding competition from society. You are the reason this country is doomed and we will soon be the laughing stock of the world!!!
You forget how many good things came from unionizing. I could write a 45 OT bulleted list. But it won’t matter. You’ve already reaped those benefits and now could care less what destroying unions will do in the long run. Just like the tax breaks you received over decades on union workers backs!!! You’ve already spent that money!!!! Screw them…right???
You’re a hypocrite and a jealous baby.
You are all that is wrong with this country and it will be your fault when you get what you want and this state along with this country literally implodes!!!
You guys should pat yourselves on the back for setting the world back 100 years!
Posted by Sean on January 13, 2016 at 1:20 pm
More whining, crying and anger, but STILL…
NO rational, logical, valid ANSWER to the question:
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
You are so creative in the personal attacks, and your anger is obvious, but you still have not answered the question…
Posted by The Resident Nutcase on January 14, 2016 at 7:57 am
I’ve given you my answer. Deferred compensation. But that doesn’t fit your narrative so you’ll continue to post the same crap over and over.
The above post is my character assessment of people like you.
Posted by Anonymous on January 13, 2016 at 11:11 am
Does not matter what any of you say the people stealing the money such as Christie will do their best to keep stealing
Posted by Tough Love on January 14, 2016 at 2:52 am
Oh so now “Christie” is stealing “the money” …… not, the Public Sector workers are (via their grossly excessive unnecessary, unjust, unfair, and unaffordable pensions & benefits) stealing money from Private Sector taxpayers ?
Posted by Anonymous on January 13, 2016 at 12:22 pm
“Colligan acknowledged that his group had actually endorsed Christie when he first ran for governor in 2009”
Let’s hope, relative to your opinion and position, that the P&FRS and TPAF continue to get it right the next two Novembers! Four Assembly seats already lost and next?
Posted by Sean on January 13, 2016 at 1:29 pm
Hey Everyone,
Isn’t it funny how TheResidentNutcase attacks anyone who thinks public pensions and benefits are too generous? How we’re all just angry, non-achieving relatives of the Koch brothers? Well, here is HIS post to me, not too long ago, when he thought I was a current public school teacher, with benefits. Check it out:
Posted by The Resident Nutcase on December 27, 2015 at 9:46 pm
And as a teacher…. Hypocritically talking shit about the very same benefits you receive….you’re no better than a judas!!! You sit here and complain because you and your ilk have milked the system the most. More than any other state worker…. For decades. Paying crap into your pensions or healthcare while getting the very best pensions of all. Now that you’re in trouble…. You’re sitting here on the wrong side of the fence because you know you are doomed!!!
Karma is a bitch…. Sean!!!
Now, tell me, WHO IS REALLY THE HYPOCRITE ON THIS BLOG?
Posted by Sean on January 13, 2016 at 1:37 pm
Quoting Nutcase:
“you and your ilk have milked the system the most. More than any other state worker…. For decades.”
So, he’s admitting that state workers have milked the system for decades, but that’s ok, because TEACHERS milk the system the most…
Posted by Sean on January 13, 2016 at 1:39 pm
Quoting Nutcase:
“Paying crap into your pensions or healthcare while getting the very best pensions of all.”
So, he’s in FULL AGREEMENT that teachers’ pensions are way too generous…
Posted by Sean on January 13, 2016 at 1:42 pm
Quoting Nutcase:
” Now that you’re in trouble…. You’re sitting here on the wrong side of the fence because you know you are doomed!!!
Karma is a bitch…. Sean!!!”
So, he’s in FULL AGREEMENT that the pensions (at least, the teacher pensions) are doomed, and lo and behold, “Karma is a b*tch.”
Sounds kind of like what we’ve been saying, all along…
Posted by Anonymous on January 13, 2016 at 2:26 pm
Ok, Sean are you sitting at your underpaying job researching and making comments on this blog? Shame on you, that’s stealing time from your employer.
Posted by Anonymous on January 13, 2016 at 2:27 pm
No just more Chicago BullS(hit) from the ILl State!
Posted by Sean on January 13, 2016 at 2:47 pm
Ahhh yes, the personal attacks continue, but STILL…
No
ANSWER
TO THE QUESTION:
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
Still waiting…
Posted by Anonymous on January 13, 2016 at 3:06 pm
Well at least you agree that you continue your personal attack on Public’s! You’re not the only one that can twist and shout.
Posted by Sean on January 13, 2016 at 3:15 pm
Shake it up baby! You know you look so fine, shake it up baby…
Nutcase, you’re still my favorite!
Posted by PSDrone on January 13, 2016 at 3:15 pm
Sean – as bad as your teacher example is I will easily wager that it is far worse for LEO and “professional” firefighters – they both can retire earlier and get more $. We are talking upwards of $3MM each for those dedicated public “servants”. And more double and triple dippers in those groups as well.
Posted by Sean on January 13, 2016 at 4:22 pm
For sure. There are definitely far, far worse cases of howling abuse…
Posted by The Resident Nutcase on January 14, 2016 at 7:59 am
You don’t pay the salaries nor the pensions of police or firefighters!!!
They are not paid by the state like teachers…..
More lies and propaganda.
Posted by PSDrone on January 14, 2016 at 7:20 pm
I know, they are paid by the sad rubes who own real estate in this God-forsaken state.
Posted by S Moderation Anonymous on January 13, 2016 at 11:54 pm
Have you stopped beating your wife?
It’s a totally specious question.
Posted by Sean on January 14, 2016 at 12:42 am
I think “specious” is a good way to describe most of your posts, SMD.
“Have you stopped beating your wife?” WTF?!
There you go again…
Posted by S Moderation Anonymous on January 14, 2016 at 2:55 am
Posted by Tough Love on January 14, 2016 at 2:57 am
Do you REALLY expect deep commentary from SMD …. he worked on trains for a living.
Posted by S Moderation Anonymous on January 14, 2016 at 6:03 am
There you go again.
Is $2.4 million a “typical” return?
Joel (teacher)
“Now let’s see if a constant 13 percent of my salary (8 percent by my employer (taxpayer) and 5 percent by me) would cover the needed $593, 546. Years of contributing = 46. Investment Return = 7.0%. Starting Salary = $7000. Annual Salary increases of 6%.
The value of my account today, if I was allowed to join the Alternate Benefit Program 46 years ago would be $744,189.”
TL
“Watch what happens if we make a change more typical of the average worker. Let’s assume a worker works for 35 years (instead of 46), starting 11 years later than when you started, with the same pay in his years 1-35 (as you rec’d in years 12-46) but retiring at age 58. Certainly, that’s a much more typical situation (although even 35 years at age 58 is likely a bit high).
For this worker, (and using the same assumptions as you did above), and having the same Final Avg. Salary, his DB pension would be 35 x .0167 x $90,900 = $53,131.
The Single Life Annuity Factor (using the same mortality table as I used above) is 10.384 using 8.163% interest rate (the interest rate underlying your Single Life Annuity Factor of 8.5), and is 13.136 using the Moody’s-suggested rate of 5.5%. In addition, accumulating his pension contributions (using the same assumption as you used) to his retirement date would accumulate (at 7%) to $534,003 (vs your $744,189).
For this (more typical) worker, the comparison (that is equivalent to the $744,189 vs $711,561 for you) is a DC accumulation of $534,000 vs a DB Plan with a value of $53,131 x 13.136 = $697,929.”
……………..
1) Where did the $2.4 million come from?
2) The teacher who “pays only a total of $126,000” is moot. The contribution is negotiable. You might have identical teachers in different districts with the SAME total compensation, SAME age at retirement, and SAME years of service, and the other teacher might have paid “only a total of NOTHING” because his district negotiated a total pickup of pension costs in lieu of higher salary.
Your governor be pullin’ numbers outta his arse again.
“Is that fair? Is that right?”
Posted by Tough Love on January 14, 2016 at 2:07 pm
I’m impressed that you saved (or dig up) my discussions with other commentators (Joel) from years back.
In any event I don’t know where Christie came up with the $2.4 million, but I seem to recall the $126K total contributions and the $2.4 Million were from before CH78 was enacted,. If so, the $2.4 million likely assumes annual COLA increases. Additionally, if I recall correctly, he was addressing this for a particular WOMAN teacher, and the longer life expectancy of women (vs men) may have been considered in coming up with the $2.4 Million.
Under those assumptions, the $2.4 Million is not unreasonable. Follow along:
Retirement at age 58
Death at age 85
Above means 27 years of pension payments
Pension formula is 1/55 for each of the 35 years of service, which comes out to 1/55 x 35 = 63.64% of salary.
Quicky spreadsheet calcs shows that a starting annual pension payment of $67,903.4 and COLA-increased by 2% annually would sum to $2,.4 Million after 27 years of payouts.
Dividing that starting pension of $67,903.4 by 63.64% gives $106,699 as the pensionable compensation…… which doesn’t seem unreasonable for a teacher retiring recently after 35 years.
——————————————–
And quoting SMD …. “The teacher who “pays only a total of $126,000” is moot.”
Rather than saying …”is moot”, a more accurate description is one I have used ….. “is a pittance” when under a proper calculation that DOES accurately reflect the time value of money, the employee contributions RARELY pay for more than 10-20% of the total cost of their (undeniably) grossly excessive pensions.
Posted by PatB on January 13, 2016 at 4:10 pm
“To give the teacher who works for 30 years and pays only a total of $126,000 for his pension and health insurance over his entire career for a total of $2.4 million in return? Is that fair? Is that right?”
I would be interested in seeing the math behind this. Dividing the $2.4M by 30 comes out to exactly $80k, implying every teacher lives 30 years after retiring and was making $160k. Certainly a high ball number.
Posted by PatB on January 13, 2016 at 4:38 pm
John, any actuarial insight on this?
Posted by burypensions on January 13, 2016 at 6:08 pm
Fairly disturbing to see the time value of money ignored and nobody noticing.
Posted by PatB on January 14, 2016 at 12:16 am
Sorry, please explain.
Posted by Tough Love on January 14, 2016 at 3:15 am
The CORRECT way to compare the VALUE of employee contributions to the expected VALUE of the promised pensions would be to compare (a) to (b) where:
(a) the sum on the date of retirement of each employee contribution INCREASED with interest to the retirement date, and
(b) the sum on the date of retirement of each expected future monthly pension payment DISCOUNTED at interest to the retirement date.
Unadjusted, Christie’s figures are VERY misleading, suggesting the employee pays only $126,000/$2.4 Million = 5.25% of the total cost of his/her pension.
But if BOTH the employee contributions and expected future pension payments are adjusted for the time value of money (as I described above), in most cases the employee contributions typically pay for between 10% and 20% of the total cost of their VERY VERY rich pensions.
Posted by Tough Love on January 14, 2016 at 3:19 am
Wow ….and you’re a CPA ???
Posted by Tough Love on January 14, 2016 at 3:22 am
Ooophs …seems I may be confusing “PatB” with “Now Retired PAT” (unless they are the same Pat).
Posted by PatB on January 14, 2016 at 5:26 am
Two different pats, and I’m definitely not a cpa.
Posted by dentss dunnigan on January 13, 2016 at 6:02 pm
The deniers will deny it ,but the facts speaks louder ….http://unionwatch.org/why-investment-realities-will-compel-pension-reform/
Posted by Eric on January 13, 2016 at 8:48 pm
John:
Does money even have any time value at all, being that the fed. has used its ZIRP (Zero Interest Rate Policy) for years while the stock market is somewhat weak as an alternative to achieving investment gains for a portfolio?
Eric
Posted by burypensions on January 13, 2016 at 9:01 pm
In the very long term it should and we may get hyperinflation some day which balances out this period. But, in the private sector they have moved toward segment rates for different periods.
In Christie’s example he should have used a7.9% interest factor which is what the state actuaries are using to get their mini-contributions and the two numbers would be fairly close. It’s a sign of basic innumeracy that nobody has called Christie out on this obvious distortion.
Posted by dentss dunnigan on January 13, 2016 at 10:05 pm
At this point in time 7.9% is just war too high ,were in a deflationary environment ,look at oil ,look at any commidity ,they are getting crushed .I just read Bill Ackerman’s hedge fund has already lost 11% this year ,lost 20% last year .I shudder to thing at what level our pension fund is at .if they have been keeping the money in a safe investment ,short term bonds they have saved a lot of pain at the expense of getting 1% to 2% interest …so how can 7.9 ever be achieved safely?….it can’t .
Posted by S Moderation Anonymous on January 13, 2016 at 9:45 pm
Two people are flying in a hot air balloon and realize they are
lost. They see a man on the ground, so they navigate the balloon to where they can speak to him. They yell to him, “Can you help us – we’re lost.” The man on the ground replies, “You’re in a hot air balloon, about two hundred feet off the ground.” One of the people in the balloon replies to the man on the ground, “You must be an actuary. You gave us information that is accurate, but completely useless.”
The actuary on the ground yells to the people in the balloon, “you must be in politics.” They yell back, “yes, how did you know?” The actuary says,” well, you’re in the same situation you were in before you talked to me, but now it’s my fault.
Posted by S Moderation Anonymous on January 13, 2016 at 10:30 pm
You know what else ain’t constitutionally protected? (Besides motherhood and apple pie)
Present worker salaries. Need $3 billion? Cut salaries by ten percent. It’s just a contract. We know what that’s worth.
How could that go wrong? Half the public workers probably won’t even quit, for a while, anyway.
If that don’t bring in enough, cut all pensions by ten percent, too. Retirees CAN’T quit. It’s just a contract.
Posted by PSDrone on January 14, 2016 at 7:15 pm
Max pension under ANY possible scenario (earnings, double dipping etc.): $60K, not to be collected before age 66. Those are the types of “fixes” needed tomorrow if any PS drone wants to be assured of receiving something (anything) in retirement.
Posted by Eric on January 14, 2016 at 12:21 am
John:
Ben Bernanke gave a speech to a “well heeled” crowd that paid many thousands of dollars to attend where he stated that interest rates, as a sign of inflation, will not return to “normal” levels during his lifetime. The Fed cannot afford a realistic indicator of inflation to stand due to the enormous debt levels it carries and services, hence seniors are getting “screwed” on their cost of living adjustments for social security. The numbers used by the feds are bogus. The latest one was ZERO.
NJ uses a percentage, perhaps only 60%, of the feds’ number for its cost of living adjustment. My point is that even if cost of living adjustments were to return for some, many retirees still could not afford the realistic increases in the actual cost of living due to the lies perpetrated upon them by the feds which “trickled down” to the state level.
Eric