Lottery Enterprise Contribution Act: Politicians Dictating to Actuaries

We have a bill introduced that proposes to move proceeds from the New Jersey lottery for the next 30 years  into the state retirement system. The state is hoping that GASB allows this to be considered an asset of the plan so that the funded ratio looks better even though on page 19 of the law we have:

The contribution shall be computed by actuaries for each system or fund based on an annual valuation of the assets and liabilities of the system or fund pursuant to consistent and generally accepted actuarial standards and shall include the normal contribution and the unfunded accrued liability contribution. Notwithstanding the provisions of any law to the contrary, the assets to be included in the calculation described in is paragraph shall not include the special asset value.

as defined on page 20:

The special asset value shall initially be the value set forth in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), and shall be revalued periodically

with section 5 on page 8 reading:

5. (New section) a. For the purposes of this act, P.L.,c.(C.) (pending before the Legislature as this bill), the Lottery Enterprise shall be valued at $13,535,000,000 as that value was determined by the independent valuation service provider engaged by the State.

Meaning that the value of the lottery will not be counted as an asset when the actuaries compute their version of the ‘required’ contribution. The reason for this is that the state wants to take no gambles on losing revenue. However much the lottery brings into the pension will be of no consequence to those who previously got that lottery money as on page 19 we have:

(3) The sum of the accrued liability and the normal contribution, calculated by the actuaries with respect to the unfunded accrued liability and normal cost for each retirement system, defined pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill), shall be reduced annually by the product of the allocable percentage for such retirement system, established in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), the adjustment percentage for such retirement system, as set forth in subsection c. of this section, and the special asset adjustment as set forth in this paragraph.

  • For State fiscal year 2018, the annual special asset adjustment shall equal $1,000,976,874

  • For State fiscal year 2019, the annual special asset adjustment shall equal $1,037,148,584

  • For State fiscal year 2020, the annual special asset adjustment shall equal $1,070,451,102

  • For State fiscal year2021, the annual special asset adjustment shall equal $1,084,354,84

  • For State fiscal year 2022, the annual special asset adjustment shall equal $1,095,871,137.

Meaning that regardless of what the lottery proceeds are the state’s contribution for the next five years will be reduced by the amounts above as the adjustment percentage defined on page 20 reads:

c. For State fiscal years 2018 through 2022, the adjustment percentage applicable to the Teachers’ Pension and Annuity Fund, established pursuant to N.J.S.18A:66-1 et seq., the Public Employees’ Retirement System, established pursuant to P.L.1954, c.84 (C.43:15A-1 et seq.), and the Police and Firemen’s Retirement System, established pursuant to P.L.1944, c.255 (C.43:16A-1 et seq.), shall be 100 percent.

So provision has been made to pay for those programs that the lottery is now funding ($987 million in FY16) and it will be the retirement system taking the risk (in reduced contributions) if lottery proceeds come up short.

62 responses to this post.

  1. Posted by Anonymous on June 26, 2017 at 10:40 pm

    Freeze the damn pensions …… and this need for game-playing ends.

    Reply

    • Posted by Anonymous on June 27, 2017 at 5:13 am

      Can’t do that….Unions will vote into office anybody that promises guaranteed raises ,pensions and healthcare….it’s the Jersey way .

      Reply

  2. Posted by Anonymous on June 27, 2017 at 6:23 am

    If I had a crystal ball I’d donate to the pension and zero out their unfunded liabilities – your welcome NJ taxpayers!

    Reply

  3. Posted by skip3house on June 27, 2017 at 8:21 am

    Instead of all this @#$%^#$, just use assets existing now, change to defined contributions, and calculate pensions based on each year of work and that total year’s contributions?
    NJ can contribute/fund yearly whatever makes sense to its Legislature (in real dollars, not promises). Move all retirees to Medicare, like us.

    Reply

    • Posted by Anonymous on June 27, 2017 at 8:32 am

      We’re heading, slowly (too ?), in that direction. Christie can leave office with a job well done; the 2011 P&B reforms, multiple NJSC victories on P&B challenges, and now the icing on the cake – an ~$13.5B asset transfer and phony unfunded liability reduction. It’s a lose, lose situation, right?

      Reply

  4. Posted by George on June 27, 2017 at 8:54 am

    My genius idea is as part of this legislation NJ pensions should be paid 50% in lottery tickets at face value. If the recipient does not want the tickets all NJ retirees would be authorized to sell their tickets at all times, in any public area including religious institutions.

    Reply

    • Posted by Anonymous on June 27, 2017 at 10:03 am

      jrs & sprs will be lining up, question is to buy or sell…..

      Reply

    • Posted by PS Drone on June 27, 2017 at 5:24 pm

      I hate to break it to you, but lottery winners are paid from the proceeds of lottery ticket sales. Thus, If you employ tickets as scrip in lieu of making pension payments, guess what – you have no proceeds with which to pay out winning tickets. A better idea is to cap annual public sector pension benefits @ $60K and make no such payments before age 66 and voila the underfunding problem disappears.

      Reply

      • Posted by Anonymous on June 27, 2017 at 5:53 pm

        Yeah, would work if NJ’s Public Sector pensions were only EQUAL TO (but no greater than) those of NJ’s Private Sector Taxpayers.

        But that no enough for NJ insatiably greedy Public Sector workers.
        *****************

        Outsource EVERYONE !

        No job = no pension (and no retiree healthcare) .

        Reply

        • Posted by S Moderation Anonymous on June 28, 2017 at 12:10 am

          You can’t even substantiate “excessive pensions”, let alone “grossly excessive “.

          “Outsource EVERYONE !” ?

          Unworkable, but, oddly, not your worst idea.

          #23%bulls hit

          Reply

          • Posted by Anonymous on June 28, 2017 at 12:29 am

            Quoting SMD…………

            “You can’t even substantiate “excessive pensions”, let alone “grossly excessive “

            I’ve provided my own demonstrations, but even if I was Albert Einstein, you’d still trash it, so I’ll simply reference Biggs AEI Study:

            https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwjnvJDq1t_UAhWB4SYKHdfdCWIQFggmMAA&url=https%3A%2F%2Fwww.aei.org%2Fwp-content%2Fuploads%2F2014%2F04%2F-biggs-overpaid-or-underpaid-a-statebystate-ranking-of-public-employee-compensation_112536583046.pdf&usg=AFQjCNEgBoTiN5n3CzTH49fPGFtEW8Bs8A&cad=rja

            See Figure 3, a comparison of retirement security (from all sources: DB, DC, SS, etc.) separately for Public and Private Sector workers. So what does it show ?

            Private Sector workers get retirement security contributions costing their employers just about 8% of wages.

            Public Sector workers get retirement security contributions costing taxpayers from 16% to 40% of wages … with the concentration centering about 25% of wages.
            ********************

            Yeah ………….. I’d consider THREE TIME more to be GROSSLY EXCESSIVE.

          • Posted by S Moderation Anonymous on June 28, 2017 at 5:11 am

            1) You appear to believe this one study is unflawed and unbiased. The other studies disagree.

            2) Anyone who reads these blogs already knows that most government employees receive higher pensions. It is a given.
            It is called “deferred compensation”, still.

            3) The question is, are the greater benefits enough to offset the lower salaries. The answer is, as it has always been…

            A. Yes, at the lower levels, total compensation for public sector workers is greater than for similar private sector workers.

            B. No, for higher level workers, even with their pensions and benefits, public workers earn less than their private-sector peers, much less.

            C. And no, for a large number of public and private sector workers in the middle ranks, their total compensation is roughly equal. They have higher pensions, but they are not, by definition, “GROSSLY EXCESSIVE” because they balance out the lower salaries.
            This pattern is agreed to by all the major studies. The only disagreement is where the “average” lies.

            4) Seriously, are you new at this? It’s not rocket surgery.

            Or, as Juvenal says…
            ” you are just wrong about the comparison of public sector and private sector total compensation (except at the level which requires no education–sorry for giving them benefits other than Medi-Cal).) ”

            #23%bulls hit

          • Posted by Anonymous on June 28, 2017 at 11:33 am

            Quoting SMD……

            “Anyone who reads these blogs already knows that most government employees receive higher pensions. It is a given. It is called “deferred compensation”, still. ”

            No, when the MUCH greater Public Sector pensions (and MUCH greater Public Sector benefits…. such as retiree healthcare) are add to wages, for all of the workers taken together* (from the lowest to the highest paid), Public Sector “Total Compensation” remains MUCH greater than that of COMPARABLE Private Sector workers.

            IN fact, 23% of pay in BOTH of our home states of CA & NJ.

            * partitioning wages and total compensation by income level can provide useful information, but when it come the the financial impact on Taxpayers, it is irrelevant. It’s the HUGE net Public Sector Total Compensation ADVANTAGE (23% of pay in CA and NJ) from ALL workers taken TOGETHER that NEGATIVELY impacts our taxpayers.

            You are blinded by your greed and an oversized sense of self-entitlement.

          • Posted by S Moderation Anonymous on June 28, 2017 at 12:21 pm

            A public sector janitor, engineer, and doctor walk into a bar…

            The janitor picks up the tab because he is the only one “overpaid”, and the only one who doesn’t get his pension reduced by the mouth breathing “reformers”.

            #23%bulls hit

          • Posted by Anonymous on June 28, 2017 at 12:30 pm

            No reason for such back and forth as it’s really quite simple; the earned deferred compensation was contractually promised

          • Posted by Anonymous on June 28, 2017 at 2:57 pm

            Quoting Anon ………..

            “No reason for such back and forth as it’s really quite simple; the earned deferred compensation was contractually promised”

            Yes contractually “promised”…………. because the Public Sector Unions have been so successful in BUYING the favorable votes of our Elected Officials with BRIBES disguised a s campaign contributions and election support.

            Hopefully, taxpayers will find the way to never pay for those unnecessary, unjust, unfair (to THEM) and clearly unaffordable “promises”.

      • Posted by George on June 28, 2017 at 12:23 pm

        “I hate to break it to you, but lottery winners are paid from the proceeds of lottery ticket sales.”

        Yes but the prizes amount to less than the face value of tickets. This is not a problem because the ‘utility’ of the chance of winning a fortune is considered higher than the utility of the face value of the lottery ticket. So retirees would get fair value after a suitable utility function is applied, while the state would save money on pension benefits. The state of NJ and lottery ticket consumers have different utility functions which I propose to arbitrage to solve the pensions crisis. Win Win I say!!!!

        Reply

  5. Posted by Anonymous on June 27, 2017 at 11:48 am

    Christie’s Lottery shell game paves the way for Lil’ Kim victory in November – rap crap NJ!

    Reply

    • Posted by Anonymous on June 27, 2017 at 1:28 pm

      Yep ..it’s just a hide the bologna trick that just dumps the previously funded programs by the lottery right to the backs of the property taxpayers .They all believe the taxpayers are too stupid to realize the games they play will ever come back to haunt them ….

      Reply

      • Posted by skip3house on June 27, 2017 at 3:18 pm

        Anon…MJ also TRUE as the gold in Fort Knox! The gold cannot be in more than one place at any given Time…!

        Reply

    • Posted by Anonymous on June 28, 2017 at 1:10 pm

      It’s obvious to anyone with a properly functioning brain, and without an “agenda” that the ROOT CAUSE of the pension mess is the ludicrously excessive UPS “promises”.

      Reply

      • Posted by Anonymous on June 28, 2017 at 2:04 pm

        Address please, no packages this x-mas.

        Point is everybody likes progress but nobody likes change, especially when it negatively impacts them!

        Reply

      • Posted by Anonymous on June 28, 2017 at 2:06 pm

        More like you forgot an S, s/b deficit operating USPS. Like ALL (quasi) Federally funded, pay as you go, keep printing (devaluing) money DBP.

        Reply

      • Posted by Anonymous on June 28, 2017 at 3:00 pm

        Public Sector workers (especially Police) would likely have a coronary if their pensions had a value upon retirement equal to that granted UPS workers.

        Reply

      • Posted by Anonymous on June 28, 2017 at 3:45 pm

        Too bad Transparent California won’t publish a list of private sector workers with their wages, benefits, and pensions. (With names redacted, of course.)

        UPS pensions (one sample, who knows how many programs they have?)

        Effective January 1, 2017, the following enhancements will be
        implemented:
        35 years, any age – $3,900
        30 or more years, any age – $3,400 plus $100/yr of service for years over 30 up to $3,900

        $46,800 a year as early as 55? With retiree medical?

        Reply

        • Posted by Anonymous on June 28, 2017 at 4:29 pm

          Lets compare to a NJ Police Officer retiring at age 55 with 30 years of service.

          UPS worker: 3,400/mo = $40,800 annually

          NJ Police Officer: Since MOST Police Officers with 30 years will retire as a Sargent or Lieutenant, their pensionable salary today would be about $150,000. With 30 years, they would get 75% of that or ………..

          0.75 x $150,000 = $112,500 or 2.78 times that of the UPS worker.

          ******************************************************

          Reply

        • Posted by S Moderation Anonymous on June 28, 2017 at 5:28 pm

          Good golly Miss Molly!

          “Lets compare to a NJ Police Officer retiring at age 55 with 30 years of service.” to a UPS worker. Of course! Why didn’t I think of that?

          Because we tried once before to compare a private sector truck driver to a New Jersey state employee truck driver. Taxpayer, would you rather have $2,566.56 per month at age 60 (New Jersey state truck driver), or $3,900 a month at age 55 (UPS)?

          #23%bulls hit

          Reply

          • Posted by Anonymous on June 28, 2017 at 7:31 pm

            SMD I think TL was comparing a UPS driver to a NJ police officer b/c of their sexy uniforms…..

          • Posted by Anonymous on June 28, 2017 at 7:35 pm

            SMD, I wasn’t trying to equate the Police Officer to the UPS driver, but only to show how much richer Public Sector pensions can be.

            But while we’re discussing comparisons, how come you’re always picking Private Sector UNION-workers (to compare to Public Sector workers) when they represent such a VERY small percentage of all Private Sector workers ………. 6% if I recall correctly?

            Wouldn’t comparing the pensions of Public Sector workers to the retirement security provided by Single Employer Corporate-sponsored Plans (where most Private Sector workers are employed) be more meaningful?

            Of course it would, but Public Sector workers pensions will look far MORE generous if we did so….. and you couldn’t show THAT now could you ?

            Need a specific example? Police RARELY have to work past age 55 (sometimes only age 50…. and sometimes even younger) to be able to begin collecting that pension without an actuarial reduction. In your UPS example above, it appears that the UPS Plan allows similar young-age retirement w/o an actuarial reduction in the monthly annuity. But it doesn’t work that way in the FAR MORE COMMON Single-employer Corporate-sponsored Private Sector Plans, where such Plans TYPICALLY reduce the otherwise calculated pension by about 5% for EACH YEAR OF AGE that you retire before age 65 (sometimes 62 with 30+ years of service).

            So not only are Public Sector Plans more generous because the per-year-of-service “formula-factors” are greater (usually in ranging from 1.75% to 3% vs 1 to 1.5% in Private Sector Plans) but the Public Sector worker can collect it 7 (or even 10) year younger WITHOUT reduction…………. DOUBLING the value of their pension relative to that of the Private Sector worker’s pension………….yes DOUBLING IT because the Private Sector workers’ pension is cut in HALF via (65-55) x 5% = 50% reduction.

            Yeah yeah I know, it’s not doubling the Public Sector worker’s pension, it’s just that the Private Sector worker’s pension is halved.

            Now concentrate hard and make believe you REALLY ARE as smart as you would like us to believe, and you’ll realize that it’s the SAME THING.

          • Posted by S Moderation, Anonymous on June 28, 2017 at 9:16 pm

            “Need a specific example?”

            Do you know what “specific” means?

            It doesn’t mean “RARELY”, “sometimes”, “TYPICALLY”, and more irrelevant math.

            Do you realize you just wasted an entire post, again, comparing only the pensions, when we have already stipulated that, for equivalent positions public pensions will be higher. But the data have already shown that, for many positions, the higher pensions are offset, or more than offset, by lower salaries in the public sector.

            Except, as Juvenal said, “at the level which requires no education–sorry for giving them benefits other than Medi-Cal).) ”

            Why is your calculation irrelevant? Whether union or single employer, most private workers have no pension at all, except Social Security. All the studies take that into account, and still determine that total compensation between sectors is roughly equal.

          • Posted by Anonymous on June 28, 2017 at 9:35 pm

            I’m telling you it has something to do with the uniforms! Maybe the clothing allowance isn’t included in the comparison?

          • Posted by Anonymous on June 28, 2017 at 10:26 pm

            Quoting SMD ………. ” All the studies ……… still determine that total compensation between sectors is roughly equal.”

            Hogwash ……show us !

          • Posted by Anonymous on June 28, 2017 at 11:41 pm

            It’s the shorts!

            Put the police in shorts.

          • Posted by Anonymous on June 29, 2017 at 6:48 am

            But would they qualify for accidental disability if they scrapped their knee?

          • Posted by Anonymous on June 29, 2017 at 11:18 am

  6. […] « Lottery Enterprise Contribution Act: Politicians Dictating to Actuaries […]

    Reply

  7. Posted by S Moderation Anonymous on June 29, 2017 at 11:33 am

    As I may have stated in the past, agencies like Transparent California should, alongside their list of public salaries and pensions, list private sector pay and pensions (with names redacted, of course. Wouldn’t want to violate anyone’s privacy.)

    We just don’t know what kind of pay and pensions these typical UPS employees receive. Other articles have said these non union employees are managerial or administrative.

    To get “in the ballpark”, here is a post from an ex-FedEx employee…

    “When FedEx Air offered pension buyouts 15 years ago, I pleaded with my coworkers to think hard. When a major corporation offers an “enhanced” benefit option….Grab your wallet. 
     
    Since the buyout the stock market has crashed twice. I kept the defined plan and retired at 55 with about 25K annually in pension. I see some of my old pals still running routes. I’m 7 years into a second career and started SS last month.”

    We have no idea what his salary was, but $25K at 55 is not a shabby pension.

    Reply

    • Posted by Anonymous on June 29, 2017 at 12:00 pm

      Doesn’t hold a candle to the $100,000 starting annual pension at age 55 for many full career CA Safety workers …………… 4+ times greater in value upon retirement* than that typically granted a comparably paid PRIVATE Sector worker retiring at the SAME age and with the SAME years of service…………….. and with the Safety worker’s contributions (INCLUDING all the investment income thereon) rarely accumulating to a sum sufficient to buy more than 10% to 15% of the incredibly generous pension.

      * Value at Retirement encompasses not just the dollar amount of the monthly annuity, but reflects the age at which payments begin and whether the monthly annuity is COLA-increased.

      Reply

  8. Posted by S Moderation Anonymous on June 29, 2017 at 4:42 pm

    Quoting TLanonymous: ” 4+ times greater in value upon retirement* than that typically granted a comparably paid PRIVATE Sector worker retiring at the SAME age and with the SAME years of service…………….. ”

    Still, one “SAME” missing. For what it’s worth, there is a real life example taken directly from national data.

    Public sector worker…
    Salary… $62,384
    Benefits… $46,672
    Total compensation… $109,056

    Private sector worker…
    Salary…$62,823
    Benefits… $25,164
    Total compensation…$87,987

    The obvious difference here is “benefits”. In fact, the public worker has listed $19,596, in “pension benefits”. That is about $20,000 more in pension benefits every year for the public worker. It is obvious that if these two workers, who have about the…

    SAME salary, retire at the…
    SAME age, with the…
    SAME years of service,…

    the public worker will receive a much higher pension than the private worker. Whether it is 4.62 times higher or 2.64 times higher. Tell me, taxpayers, is this EQUAL?
    ………….
    Of course not. Is it fair? Of course. These workers do not have the fourth “SAME”. The public sector worker is in a position requiring a Master’s degree. The private sector worker on a Bachelor’s degree.

    I don’t know why this principle is so hard to grasp. The public sector worker accepts a smaller salary in exchange for a secure pension. It is called deferred compensation.

    Those were workers, as TL specified, who have similar pay, but the public pension is much larger. Nothing to see here, folks.

    How does a public sector Master’s level worker compare to the private sector?

    Private sector worker (Master’s)
    Salary… $82,319
    Benefits… $30,623
    Total compensation… $112,942

    The total compensation of the public and private Master’s level jobs is “roughly equal”, but the public sector worker undoubtedly has a much larger pension.

    Is that fair? Is it equal?

    Yes, because the private sector worker with the SAME education, experience, and responsibilities, takes home $20,000 a year more in wages than than an equivalent public worker.

    I wish I could say this more succinctly, or TL could somehow grasp the concept. You cannot compare pensions outside the context of total compensation.

    Next time you see “SAME, SAME, SAME”, think SHAME, SHAME, SHAME.

    You cannot compare the pension of a California safety worker to that of a UPS or FedEx administrative employee.

    Taxpayers, what would you do with an extra $20,000 in wages every year?

    Reply

  9. Posted by Anonymous on June 29, 2017 at 5:37 pm

    Concentrate SMD …..even a light-bulb-changer can “get it” if they try hard enough.

    That statement (repeated below) is accurate ………………….. period.

    It was addressing Safety-worker “pensions” and specifically, the “value upon retirement”*. For simpletons, we can make that easier to understand…… it’s the up-front dollars needed upon commencement of the pension necessary to BUY the promised stream of future payments, from the date of retirement to the date of death (or the survivor’s death, if so elected) including estimates of COLA-increases if applicable.

    *******************************************************

    “…… 4+ times greater in value upon retirement than that typically granted a comparably paid PRIVATE Sector worker retiring at the SAME age and with the SAME years of service”

    Reply

  10. Posted by S Moderation Anonymous on June 29, 2017 at 6:41 pm

    Where is Rex the Wonder Puppy when you need him?

    It is entirely appropriate, fair, equal, and copacetic for a public worker with the same salary as a private worker to have a much greater pension, if the “same salary” is a result of the public worker accepting a lower salary in return for that larger pension and/or larger “value upon retirement”.

    In Biggs’s example, a private sector “Professional” has a much smaller portion of compensation in the form of retirement benefits. Of Course the public sector will have a much larger “value upon retirement”. In the meantime, that private sector worker is pulling in a 59% higher salary. About $59,000 a year more. With that cash, he could fund his own retirement that makes the public sector look anemic.

    “…… 4+ times greater in value upon retirement than that typically granted a comparably paid PRIVATE Sector worker retiring at the SAME age and with the SAME years of service”

    …means less than nothing if you are not comparing similarly qualified employees.

    For example, your math works if you are comparing public and private janitors, who each earn about the same salary. Yes, the public janitor with the same pay, same age at retirement, and same years of service will have greater value at retirement. But the advantage narrows as education, experience and responsibility increases. At some point (there is the disagreement between Biggs and Munnell), the greater benefits roughly offset the lower salary, and at the highest levels, the benefits are not enough to offset the lower wages.

    SAME
    SAME
    SAME
    SAME

    You almost got it right, one SAME short.

    Reply

  11. Posted by Anonymous on June 29, 2017 at 7:49 pm

    Quoting SMD………

    “It is entirely appropriate, fair, equal, and copacetic for a public worker with the same salary as a private worker to have a much greater pension, if the “same salary” is a result of the public worker accepting a lower salary in return for that larger pension and/or larger “value upon retirement”.”

    Absolutely true.

    But in my earlier comment ……….. to which your latest comments were responding ……. I was SPECIFICALLY addressed Public Sector SAFETY workers (Police & paid Firefighters). In NJ, the LOWEST rank Police Officer TYPICALLY has wages of $125+K annually after just 5 years, and with quite a few Towns now paying in excess of $135K annually.

    Earth the SMD……………. NJ’s police are overpaid in WAGES ALONE ….. and are, by every and any reasonable metric, paid MORE than Private Sector workers in jobs with comparable “risks” and which require comparable levels of education, experience, skills, and knowledge.

    Then ON TOP OF THAT, we layer pensions 4+ times greater “value upon retirement” and heavily subsidized retiree healthcare benefits all but gone as an employer-sponsored benefit in the Private sector.

    You can dance around it all you want, but NJ Safety-worker “wages” are excessive and their “Total Compensation” is ludicrously excessive.

    P.S., that 4+ times greater would be 5 to 6 times greater in CA because NJ’s COLA-increases are now suspended while CA continues to grant them, and CA’s Police pension formula is even higher (i.e., MORE ludicrous) than that of NJ.
    **********************************

    But don’t get too comfortable by thinking that I now believe excesses in the Public Sector extends only to Safety workers. Not so …………

    Compared to pensions granted Private Sector workers under non-Union* Single-employer Plans, the 4+ times greater Public/Private Sector pension relationship (see above) applicable to Safety-workers is indeed smaller for non-Safety-workers….. only 2 to 3 times greater (due to higher retirement ages and less rich formulas than those granted Police ……….. but still MUCH more generous than those typically granted comparable Private Sector workers).

    Are their SOME Public Sector workers (with such high level attributes) that even with these extremely generous pensions & benefits that they would make more in “Total Compensation” in the Private Sector (via much higher wages) ? Likely yes, but on the other end, we KNOW that there are MANY lower paid Public Sector workers that are highly over-compensated, making more in wages alone, even before adding in the MUCH greater pensions & benefits. And as I have pointed out before, what FINANCIALLY IMPACTS the Taxpayers is the NET advantage from for ALL workers taken together.

    —————————————-

    * yeah, pension/benefits are likely different for the 6% of Private Sector workers that belong to PRIVATE Sector Unions. E.g., Allowing one to retire at age 55 (as was mentioned for the UPS Plan) without a VERY material actuarial reduction in the otherwise calculated benefit is unheard-of in Single-Employer Plans.

    Reply

  12. Posted by S Moderation Anonymous on June 29, 2017 at 10:39 pm

    Quoting T Lanonymous

    “Are their SOME Public Sector workers (with such high level attributes) that even with these extremely generous pensions & benefits that they would make more in “Total Compensation” in the Private Sector (via much higher wages) ? Likely* yes,…”

    And “there are MANY lower paid Public Sector workers that are highly over-compensated, making more in wages alone, even before adding in the MUCH greater pensions & benefits.”

    But, don’t forget the thousands (or hundreds of thousands) of Public Sector workers in the middle cohort who, even with their allegedly excessive benefits and pensions, are “roughly equal” in total compensation to their peers in the private sector. Neither over nor under-compensated. These people are not moochers. They are neither suckling at the public teat nor slopping at the public trough. They are represented by unions that are not a Cancer demanding unreasonable pay or benefits. They are ordinary workers adding value to the state and reasonably compensated for their labor. How large this group is, and where the “average” lies is what all the studies are debating.

    By definition, this group is roughly (there is a continuum) equally compensated, even though their pensions are 2-3 times greater in value upon retirement. It is an inescapable tautology. That’s what is wrong with your math. All public employees have larger pensions, but not all are “over-compensated” (or under-compensated).

    My objection to “Doesn’t hold a candle to the $100,000 starting annual pension at age 55 for many full career CA Safety workers…” is that you know nothing about this worker except his pension and retirement age. You are comparing a safety worker to someone who could be a low level clerk with twenty years, or a higher level manager with ten years. You are high on opinion and low on facts.

    *”Likely yes,”

    Yes, likely ten percent of all public workers, under-compensated.

    Reply

    • Posted by Anonymous on June 30, 2017 at 12:19 am

      SMD,

      BEFORE responding, I’ll point out that I DID NOTICE that you can’t even acknowledge that EVERYTHING you said in your last few comments was IRRELEVANT because it had NOTHING to do with the PENSIONS of SAFETY-workers that I was discussing, and you went off on your own tangent addressing NON-SAFETY worker “Total Compensation”.

      Reading comprehension problem, or just arrogance ?
      ________________________________________

      Quoting SMD…………..

      “But, don’t forget the thousands (or hundreds of thousands) of Public Sector workers in the middle cohort who, even with their allegedly excessive benefits and pensions, are “roughly equal” in total compensation to their peers in the private sector. ”

      I haven’t forgotten them ………..

      While these (non-Safety) Public Sector workers don’t have the 4+ times greater pensions, they DO have pensions with a “value upon retirement” 2 to 3 times greater than those of COMPARABLE (yes COMPARABLE …. did that sink in ???) PRIVATE Sector workers.

      That 2 to 3 times greater translates in an extra 25% of pay (give or take less than 5%).

      The AEI Study shows in Figure 1 that Public Sector “wages” in NJ are only 4% lower than their Private Sector counterparts Combining these 2 elements in NJ gives 25%-4% = a 21% Public Sector Wages+Pensions ADVANTAGE, and add in the better Public Sector “benefits” and we’re right in line with the AEI Study’s 23%-of-Pay PUBLIC Sector “Total Compensation” ADVANTAGE.

      _______________________

      And oh yes …………….. the UNIONS representing Public Sector workers are INDEED a CANCER inflicted upon Civilized Society, and the Elected Officials who sell their favorable votes (on Public Sector pay, pensions, and benefits) for BRIBES disguised as Campaign contributions and election support are no better.

      Reply

  13. Posted by S Moderation Anonymous on June 30, 2017 at 1:08 am

    LOL!

    Sleep on it, Love. Maybe it will come to you.

    Reply

  14. Posted by Anonymous on June 30, 2017 at 1:56 am

    SMD,

    Look at me as your conscience (reminding you to be truthful), not your boss.

    Reply

  15. Posted by Anonymous on June 30, 2017 at 11:49 am

    SMD’s home State of CA is a lucrative place to work, especially if you are a Police Officer …..

    ———————————————————————-

    “For every one police officer, three-quarters of the next police officer is a pension payment. That is a very scary place to be.”

    —Acting Modesto, CA City Manager Joe Lopez on projections that, in eight years, the city will be paying nearly 72 cents in pension costs for every dollar in police officer salary. Quoted in Kevin Valine, “Modesto pension costs expected to skyrocket,” Modesto Bee, May 27, 2017.
    _______________________________________________

    Yes, 72% vs what Private Sector workers typically get from their employers towards their retirement ……. about 10% of pay, split between their employer’s 6.2% Social Security contribution on their behalf, and a 3% to 4% of pay “match” into a 401K Plan.

    Reply

  16. Posted by S Moderation Anonymous on June 30, 2017 at 12:28 pm

    Posted by Anonymous on June 23, 2017 at 5:35 pm
    Ah yes, back to Study Author Keefe ….. who believes that the annual “cost” of Public Sector pensions is what the Gov’t entity actually CONTRIBUTES in that year.
    In several years, NJ contributed NOTHING . Does that mean that the value of that year’s pension accruals was nothing ?
    Go ahead, you brought Prof Keefe…….. justify such (ludicrous) thinking.

    Reply

    • Posted by Anonymous on June 30, 2017 at 12:42 pm

      You already responded to that as follows (on June 23, 2017 at 7:36 pm):
      ——————————————————————————

      In answer to your question, no, I cannot justify Keefe’s methodology. “

      Reply

    • Posted by Anonymous on June 30, 2017 at 12:53 pm

      Details from this source:

      http://www.heritage.org/jobs-and-labor/report/public-sector-compensation-correcting-the-economic-policy-institute-again

      From section on Pensions…………

      From Keefe:

      In discussing defined-benefit pension plans…Biggs and Richwine lose their focus. They incorrectly assert that ‘employer contributions to pensions are only a proxy by which we infer the value of an actual future pension benefit.’ This is blatantly wrong. The employer contributions are the cost of the employees’ compensation whether they are invested poorly or wisely.

      Biggs/Richwine response:

      Keefe is correct for a defined-contribution plan, where the employer’s obligation begins and ends with the contribution. But for defined-benefit plans, Keefe is himself blatantly wrong. Defined-benefit pension compensation is not a contribution today but a benefit tomorrow, the value of which derives from the formulas used to calculate benefits and from the government’s legal obligation to pay them. How much a pension plan currently contributes and how aggressively those contributions are invested have literally nothing to do with the actual benefits workers will receive. The employee’s entitlement to future benefits, an entitlement that is protected by law, exists even if zero employer funds were put aside in a given year.

      Reply

      • Posted by S Moderation Anonymous on June 30, 2017 at 1:24 pm

        T-nonymous:
        “SMD’s home State of CA is a lucrative place to work, especially if you are a Police Officer ”

        “For every one police officer, three-quarters of the next police officer is a pension payment. That is a very scary place to be.”

        A Biggs:
        “How much a pension plan currently contributes and how aggressively those contributions are invested have literally nothing to do with the actual benefits workers will receive.”

        Reply

        • Posted by Anonymous on June 30, 2017 at 1:28 pm

          Yup ………………… both correct.

          Reply

        • Posted by S Moderation Anonymous on June 30, 2017 at 2:30 pm

          A Modesto police officer does not receive 72% of his salary towards his retirement. Most of that is payment on the unfunded liability. Only the normal cost is counted in his total compensation.

          Reply

          • Posted by Anonymous on June 30, 2017 at 2:49 pm

            And who is it that benefits from the payment of the unfunded liability?

            Answer: The Police Officers..

            Yeah, It’s part of their “compensation”.

          • Posted by Anonymous on June 30, 2017 at 2:52 pm

            And …………..

            To a large extent, the unfunded liability EXISTS specifically BECAUSE the Normal Cost has materially & intentionally been understated to make Public Sector pensions look far less costly than they really are.

          • Posted by Anonymous on June 30, 2017 at 3:08 pm

            SMD,

            The effects of the RETROACTIVELY applied (to PAST service) SB400 (and similar law) pension increases in your State of CA created “unfunded” pension promises in the $ Billions.

            Who but the Plan participants benefited from those RETROACTIVELY-applied pension increases (aka THEFT of Private Sector Taxpayer wealth) ?

  17. Posted by Anonymous on June 30, 2017 at 12:35 pm

    Quote of the day …….. from Illinois Treasurer Michael Frerichs:

    “The General Assembly limits where I can make investments,” Frerichs said. “We want to ensure that we preserve capital and that I’m not taking risks in my office’s investments and by that definition, the state of Illinois is too great of a risk for the state to invest in.”

    Reply

  18. […] is a sham reform that should do nothing more than convince the uninitiated that the state is as bankrupt of ideas as […]

    Reply

  19. […] is a gimmick with no useful purpose except to reduce state contributions slightly while deceiving those who […]

    Reply

  20. […] turned over to the pension system but the proceeds from the lottery which the state will recoup by shorting pension contributions some more yet we have on page […]

    Reply

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