NIRS Seeking Purpose

Last week I noted the duplicity of a report released by the National Institute on Retirement Security (NIRS) looking to scare public plan sponsors away from moving employees from Defined Benefit to Defined Contribution plans. Today Jane the Actuary made a few more salient points concluding with:

But it is only a Defined Contribution program that can wholly remove from legislators the temptation to ask (OK, require) future generations to pay for this year’s benefit accruals, sometimes leaving them with bills of such magnitude as to imperil provision of basic human services. Only a Defined Contribution ensures that the retirement benefit is always by definition 100% funded. And only in a Defined Contribution program is the benefit defined up front and transparent to all. And that, dear readers, is the purpose of pension reform.

Sadly that is not the purpose the NIRS and their public union benefactors seek.

119 responses to this post.

  1. Posted by NJ2AZ on August 16, 2019 at 12:57 pm

    El G good sir,

    With the promise that i won’t vilify you for your response: What % of your pay (your contribution + the state’s) goes to fund your pension?

    I just got the annual ASRS mailer for the Mrs (Arizona State Retirement System). This year her contribution is up to 24% (12% employee + 12% employer). Curious how NJ compares.

    The Mrs’ plan is 70% funded according to the last CAFR

    Reply

    • Lol. Deal.
      I pay 10% of my salary and the town pays a fluctuating rate that differs every year, but on average is roughly 16%.

      Reply

      • The 16% will gradually lessen over time as more tier 3 people make up our force. We are now at 50% tier 3. So we only have 9 guys left at tier 1. This year the town paying about $250,000 or so into the fund. Not much when figured into the municipal budget. Salaries alone are prob just over $2MM.
        With no SS payment or 457 DC match the pension payment is not much (and may in fact be more if you include both portions of SS) than that. Figure SS and a decent DC match would be around 11% or so.
        Let’s all wait for TL rebuttal…..2X to 4x better etc.
        copy and paste loser. Go ahead.

        Reply

        • A town that has more older guys at the high end of the scale will have a much larger pension contribution. Bad for the towns but better for the state.

          Reply

          • Posted by Tough Love on August 16, 2019 at 9:18 pm

            In $$ you are correct, but given the HUGE annual increase in the pension in the latest part of your career, the smartest financial move the towns could make is to fire everyone just BEFORE they reach 20 years.

            Reply

          • Which is why we have protections that say you can’t. lol. Specifically for folks like you who would do that and fire a guy cause they wrote you buddy or your cuz needed a job. Lol. Just for folks like you.
            And it must’ve been soooooo hard to say in $$ you are right. Really that’s all that’s matters. Getting to be almost half tier 3 guys.
            In the future the number will be 30 years not 25 for most guys. And yes it will keep higher prices guys on, the demand on the pension system to pay pensions will gradually decrease and along with it the %. It may in fact go down to 10% or so for the town side as well.
            Wow. It is very rare that E reads TL say I’m correct. This is because it kills you to do so. Let’s be honest.

            Reply

          • Posted by Tough Love on August 17, 2019 at 8:57 am

            El gaupo,

            Don’t pat yourself on the back………

            When I stated that …..”In $$ you are correct” …………. I was only agreeing to your correct fact that ………. “A town that has more older guys at the high end of the scale will have a much larger pension contribution. ”

            Nothing more.

            Reply

        • Posted by stanley on August 16, 2019 at 1:59 pm

          Constable, are those percentages based on only the 40 hour work week or the gross pay or some other number?

          Reply

        • Posted by Tough Love on August 16, 2019 at 9:15 pm

          El gaupo,

          You are in your 24th year and the 10% that you are now contributing is only for the past few years, being MUCH lower for most of your career.

          The pension you have been granted requires just about a level annual 40*% total (ee + er) contribution in EVERY year of your career to be fully funded upon retirement. THAT …. the 40% less your 10% = 30%-of-pay …… is what the Taxpayers are “responsible for” should be looking at vs the 3%-of pay that they typically get in 401K employer contributions annually .

          Yes, as I stated in an earlier comment, you have been granted (by self-serving contribution-soliciting, vote-selling, taxpayer betraying Elected Officials) a pension that will untimely cost the Taxpayers 10 TIMES what they typically get from their employers (your 30% vs their 3%).

          And you take offense when I call you a “moocher” !

          * the 40% assumes that COLAs are NEVER reinstated. The identical Plan WITH COLAs (per NJ past practices) would require over a 50%-of-pay Total level annual contribution

          P.S. You BENEFIT by not participating and not paying into SS because at the income level of NJ Police, SS is a very bad deal (ROI-wise).

          Reply

        • Posted by Marcia on August 16, 2019 at 10:22 pm

          El Gaupo,
          When my company froze its pension plan, it was replaced with defined contribution with an increasing percentage based on longevity. It tops out at about 16-17% of employee salary ( including S.S.)…. so that amount is not completely unheard of in the private sector. However I know that this is not typical and I am very fortunate.

          Reply

          • Posted by Tough Love on August 16, 2019 at 10:50 pm

            Marcia,

            The 16%-17% is really about 10% with the employers’s SS contribution removed.

            That is indeed generous (but as you stated, is applicable only to long-service employees).

            It’s that 10% that should be compared to the Taxpayers’ level annual 30%-of-pay that would be needed to fully fund El gaupo’s pension by the time he retires (as it SHOULD BE!). And as I stated earlier, SS is not relevant because El gaupo neither GETS nor PAYS for SS and it would be a bad deal (for someone at his income level) if he in fact did participate (very low ROI).

            Reply

          • Posted by Tough Love on August 16, 2019 at 11:44 pm

            Marcia, Perhaps you also missed an important point.

            When the Pension Plan that El gaupo participates in (NJ PFRS) is valued …. not using the VERY optimistic assumptions & methodology that it in fact uses …….. but the SAME assumptions and methodology required by US Treasury/IRS Regs. of Private Sector DB pension Plans, the PFRS “funding ratio” is just about 50%……… meaning that is has HALF of the assets that is should have in-hand TODAY.

            The reason is because the combined contribution necessary to fully fund the pension that El gaupo has been promised ANNUALLY costs a great deal MORE than the combined 10% that he contributes plus the 16% that he stated that his town contributes.

            But it gets worse…………..

            You see, the 40% level annual contribution necessary to fully fund his promised pension benefits is what necessary to fund only the Plan’s “Normal Cost” (meaning that there are no “catch-ups necessary from prior under-funding).

            Because the PFRS Plan is now only about 50% funded (under a “proper” valuation) a large share (likely at least half) of the current 10%+16%=26% isn’t going towards funding that “Normal Cost” (which needs a full 40% contribution by itself), but instead it is going towards amortizing underfunded PAST service accruals.

            Reply

          • Posted by Anonymous on August 17, 2019 at 12:30 am

            Marcia,

            Mr. Love missed an important part also. When job hunting, applicants would naturally compare all aspects, plusses and minuses of the various positions available. It would be reasonable for a company with no pension plan to offset that with higher wages. If one employer reduced or eliminated pensions, he shouldn’t be surprised if his employees began checking out the market for better jobs. It’s the American way.
            It is not valid to compare pensions outside the context of total compensation. *
            If you are a professional or in middle to upper management, you probably already earn more than an equivalent worker in the public sector, even though he may have a more generous pension.
            It’s called deferred compensation. It is well documented that public-sector workers receive a higher proportion of their income in the form of benefits rather than wages.

            * Don’t be invalid.

            Reply

          • TL. I paid 8.5% until 2011. So it has been more than “a few years” now.
            And when I made $50,000 or so the town paid 15% or so of that number. So….the biggest increases are in fact in the later years just like Marcias plan. And a pension is of course only available (absent injuries—-and you know my position on abuse of that) to folks that complete a career.
            Any way you slice it, it does not cost you a ton of money to give cops a decent pension. Get of your high horse and join the force. We could use a good woman. It’s not us vs them TL. It’s us and the community against the lawbreakers.
            You are a liberal at heart. You only post negative things about my profession just like a liberal rag and these liberal folks running for president. You’re no different. I never see a balance of posts when a cop does something well. It’s aleays when one screwes up. As Earth says, it makes you invalid.

            Reply

          • You couldn’t wait to “correct” Marcia. As though she can’t have an opinion that differs from your militant stance. Such a tool TL. Just like with MJ and AZ.
            God forbid one of them actually talk to me like a human being. 🙄

            Reply

          • Posted by Tough Love on August 17, 2019 at 9:10 am

            Something that should be added to Stephen Douglas’s (posting under Anonymous and time-stamped August 17, 2019 at 12:30 am) response to Marcia ………

            Yes, were need to compare Public And Private Sector “Total Compensation” (wages + pensions + benefits). We were talking about El gaupo in that discussion, and besides his VERY generous (and hence VERY “costly” pension and benefits) his base-pay wages as a Police Officer in a northern NJ “bedroom community” is just about $150K annually (per him).

            While there are no Private Sector jobs directly comparable to that of Police Officer, (a) there are per the US Gov’t BLS there are MANY that have higher mortality and morbidity risks, all of which excepting commercial airline pilots pay MUCH MCUH less, and (b) there are many that require comparable experience, education, skills, and knowledge to that of Police Officer (even though in a different occupation) that pay MUCH less.

            The bottom line is that in El gaupo’s case, he is over-paid in all 3 elements of Total Compensation ……. wages, pension accruals, and benefits.

            Reply

          • Posted by Tough Love on August 17, 2019 at 9:20 am

            El gaupo,

            Nowhere was I “correcting” Marcia. I added to the discussion where I believe more depth would be appropriate. Welcome might be an alternative for appropriate, but I do understand that you (and Stephen Douglas) being on the “taker” end of this pension mess find NOTHING that I say (as a pension reform advocate) to be “welcome”. .

            I YOUR case, unfortunately “correction” can be necessary ………… like when you (now more and more often) you assign to me things that I did NOT say.

            Reply

  2. Jane the Actuary;

    You are on point. Because investment gains and losses belong to the
    participant should not the participant approve the investment menu?

    In all too many cases these investment menus are noted for their high rather than low cost. DC plans have simply been a full time opportunity to charge unwarranted fees and commissions.

    Reply

    • Posted by NJ2AZ on August 16, 2019 at 2:02 pm

      How could politicians carry out all their virtue signaling disinvestment if the participants had to approve?

      Reply

    • Posted by stanley on August 16, 2019 at 2:10 pm

      Just out of curiosity, how do you know? I just have experience with one set of options from one financial services company and as I recall the fees were reasonable enough. We had a 4% company match of 8% participation. People with poor results held speculative funds or positions thru a bad downturn. The biggest problem that I see is that most people buy what looks good instead of what is being shunned. This almost guarantees that they buy high and sell low.

      Reply

      • DC investing consists of two expenses: plan administration and investment management. Plan administration should not exceed 15 basis points while investment management should not be greater than 25 basis points. See the Deferred Compensation 457(b)/401(k) Plans of the City of New York. See the 403(b) Plan of the Teachers’ Retirement System of the City of New York. See the Deferred Compensation 457(b) Plan of the State of New York.

        With that said, the typical 457(b)/403(b) plan in the State of New Jersey costs the employee/investor roughly 200-250 basis points. That’s the result of being sold commission-based retail priced mutual funds and variable annuities. See the New Jersey State Employees Deferred Compensation Plan.

        Is there a plan in New Jersey with an investment menu consisting EXCLUSIVELY of no-load funds?

        Reply

        • Posted by Tough Love on August 18, 2019 at 12:16 pm

          Demanding such (low-cost services & fees) from the Administrative/Investment advisory firms that provide such services would certainly NOT result in the level campaign contributions that Elected Officials are accustomed to and looking to maintain.

          Reply

        • Posted by stanley on August 19, 2019 at 4:05 pm

          “Is there a plan in New Jersey with an investment menu consisting EXCLUSIVELY of no-load funds?”

          I see your point, but when I was in a 401K plan, I had to participate and make sure I received the company’s 4% match. I suspect that many people consider their deferred tax plan as all they can/need to do to prepare for retirement. The long term tax treatment for personal accounts is usually far better than for deferred tax accounts. Sometimes, lower income tax payers receive tax free capital gains. For high income tax payers, it probably won’t make much difference and some don’t receive social security payments. Others, will find that the taxes on deferred savings are the going tax rates and more of their social security is also subject to taxes. Tax deferred savings accounts give the appearance of more wealth saved than actually exists. (IMO)

          Some have to make a meal of others and our objective is to not end up on someone else’s dinner plate.

          Reply

  3. Posted by Anonymous on August 16, 2019 at 4:20 pm

    “And only in a Defined Contribution program is the benefit defined up front and transparent to all. And that, dear readers, is the purpose of pension reform.”

    Not so sure about that. Is the “benefit” defined up front, or the “cost”?

    Is there any form of sharing longevity risk in a DC system? It seems like that is a big advantage for defined benefits.
    ——————————–
    And the big one….

    “But it is only a Defined Contribution program that can wholly remove from legislators the temptation to ask (OK, require) future generations to pay for this year’s benefit accruals…”

    True, but isn’t it possible to rein in that temptation through constitutional or even tax (exempt) law provisions?

    Look at two of the “fully funded” state systems: Wisconsin and New York. They both have above average benefits, and below average costs.

    “And that, dear readers, is the purpose of pension reform.”
    ——————————-
    A limited amount of under (or over) funding may not be a bad thing: Ed Ring…

    “And because risk in a defined benefit fund is shared across generations of workers, during eras when investment returns are low, existing workers guarantee extra cash coming into the plan to keep it solvent, and during eras when investment returns are high, surpluses are fed into the pension fund that can also be used to make up the shortfall during lean years.”

    Reply

    • Posted by Tough Love on August 16, 2019 at 9:31 pm

      Not a surprising comment from you Stephen,

      So I’ll point it out again …………..

      ————————

      Stephen Douglas,

      Below is a quote about Trump. You operate in EXACTLY the same way (but about the excessive Public Sector Total Compensation ………… you know, that pesky 23%-of-pay Public Sector Total Compensation ADVANTAGE in CA and NJ):

      “It was a classic Trump move: distract, divert, repeat. When a presidential problem surfaces, the president finds a way to move the problem out of the public eye, relieving pressure on him to solve the actual problem.”

      Reply

  4. Posted by Tough Love on August 16, 2019 at 10:39 pm

    John,

    I just read the full article from Jane the Actuary, essentially pointing out (as you did) that the NIRS Report is a study in duplicity.

    I’d love to see Stephen Douglas ( our resident “UNION’s RULE retired CA Public Sector commentator) try to put some lipstick on this PIG !

    Of particular interest to me was the author’s last sentence in the section on the Kentucky changes, quoting …………

    “The report rightly pins the blame on the state’s historical ongoing failure to fund these plans, though, of course, there comes a point at which this is all a bit circular, as it is generous benefit levels in the first place which bring a state to the point at which it deems its contribution levels “unaffordable.”

    Isn’t that just another way to say what I have been saying for a LONG TIME…….. that the lack of full funding is not the ROOT CAUSE of the pension mess (i.e., the material underfunding) but a CONSEQUENCE of the true root cause ….. grossly excessive pension “generosity”?

    Reply

  5. Posted by Anonymous on August 17, 2019 at 1:31 am

    I feel the love?
    And I agree the NIRS paper is misleading. There’s a lot of that going around.

    We agree with Jane and NIRS that the blame is on the state’s historical ongoing failure to fund these plans,
    We don’t necessarily agree at the “point at which this is all a bit circular”
    There are cases where less generous pensions are badly underfunded, and cases where more generous pensions are fully funded. If the state properly calculates the ARC —and— faithfully contributes, it is much cheaper in the long run.

    It’s the vigorish that gets you.

    Reply

    • Posted by Tough Love on August 17, 2019 at 9:31 am

      Quoting ………..

      “There are cases where less generous pensions are badly underfunded, and cases where more generous pensions are fully funded. ”

      I’m sure you consider NJ’s pension “less generous” (as it’s certainly a lot less generous than those in your home Sate of CA), but “less generous” than what” ?

      Oh …….. than other PUBLIC Sector pensions. Now we get it.

      Sorry buddy, but Public Sector pensions should rightfully be compared (yes as part of a Total Compensation comparison) to the retirement security granted PRIVATE sector workers with reasonably comparable experience, education, skills, and knowledge, because it is ONLY in the PRIVATE Sector that employers freely compete for talent (resulting in true “Market-Rate” compensation), unencumbered by the underhanded Union/Elected-Official deal-making that is rampant in the PUBLIC Sector.

      Reply

    • Posted by Anonymous on August 17, 2019 at 2:35 pm

      “Oh …….. than other PUBLIC Sector pensions. Now we get it.”

      Oh ……. you don’t get it atoll.

      It is not valid to compare pensions outside the context of total compensation.
      It is valid to compare total compensation, public to private, public to public, or private to private. An accountant job seeker can be expected to compare two or more public and/or private sector job offers. Personal choice, given similar TOTAL compensation, do I want higher pay right now, with little or no retirement security, or am I willing to accept less pay today in exchange for a comfortable retirement. There is no right or wrong answer. The total compensation is the same either way. But if you —choose— to earn more money today, and don’t use some of that money to fund your retirement, you don’t get to complain about moochers.

      Now, I will type very slowly, take your time here. This is a separate concept. Is the pension “sustainable” or “affordable”? I reject your tenet that excessive pension generosity is the root cause of underfunding. There is clear evidence that systems as “generous” (or more so) as New Jersey’s have been capable of maintaining full funding. And… at a lower cost. How?

      Discipline.

      “It is entirely possible for a state or city to properly fund a Defined Benefit pension plan; it just takes discipline, …”
      Jane the Actuary

      Reply

      • Posted by Tough Love on August 17, 2019 at 3:19 pm

        Quoting Stephen Douglas …………

        “It is not valid to compare pensions outside the context of total compensation.”

        Which is exactly why I stated in my comment ……

        “Sorry buddy, but Public Sector pensions should rightfully be compared (yes as part of a Total Compensation comparison) to the retirement security granted PRIVATE sector workers with reasonably comparable experience, education, skills, and knowledge, because it is ONLY in the PRIVATE Sector that employers freely compete for talent (resulting in true “Market-Rate” compensation), unencumbered by the underhanded Union/Elected-Official deal-making that is rampant in the PUBLIC Sector.”

        Did you miss the part where I stated …..” (yes as part of a Total Compensation comparison)”…….. or is it that you are so BIASED that it doesn’t matter whether what you say makes any sense?
        ————————————————————-

        And quotinf Stephen Douglas …………

        “I reject your tenet that excessive pension generosity is the root cause of underfunding.”

        Now there’s a big surprise given that your on the “taking” end of this enormous Taxpayer ripoff.

        And to be clear, my statement has been that excessive “generosity” is the ROOT CAUSE of the “pension mess”, and the lack of full funding is not the CAUSE of, but the CONSEQUENCE of that real root cause (excessive pension generosity).
        ————————————————————

        Quoting ……………… “There is clear evidence that systems as “generous” (or more so) as New Jersey’s have been capable of maintaining full funding.”

        ANY pension, even one 10 times greater than the rip-off level of the DB Plans in place today CAN be fully funded IFyou throw enough money at it. All that full funding in States with excessively generous Plans shows is that those States have been more successful if ripping-off their Taxpayers.

        Reply

        • Posted by Anonymous on August 17, 2019 at 4:50 pm

          L

          O

          L

          Who is selectively quoting now?

          “There is clear evidence that systems as “generous” (or more so) as New Jersey’s have been capable of maintaining full funding. And… at a lower cost. How?”

          Reply

          • Posted by Tough Love on August 17, 2019 at 8:37 pm

            Mathematically impossible*………….. YOU show me the evidence.

            * short of oddball and differing definitions of ‘at lower cost’ or one system having extraordinarily good investment earnings vs poor earnings in the other.

            Reply

  6. Why hire an Actuary if you’re going to put in less than the actuarial calculation? If the law disallowed this popular practice we would not be having this discussion!!

    Reply

    • Posted by Anonymous on August 17, 2019 at 9:37 am

      There you go! Pension reform. Theoretically, states were excluded from ERISA because states are sovereign and could not be compelled to follow federal law.
      But they could be persuaded, by making federal tax deferred status contingent on following federal guidelines. They already are, to an extent.
      It can be done. It is being done by several states.

      Reply

  7. Posted by Anonymous on August 17, 2019 at 7:32 am

    Quoting Mr. Love…
    ” I just read the full article from Jane the Actuary…”

    And what I LEFT OUT was this…

    “The bottom line is this:”

    “It is entirely possible for a state or city to properly fund a Defined Benefit pension plan; it just takes discipline, plus either a risk-sharing design or a willingness to suck it up and pay more when the math requires it.

    It is likewise possible under either a Defined Benefit or Defined Contribution system for the state to promise a retirement benefit that meets its employees needs for adequacy while not overspending. (Employers are also perfectly free, in a Defined Contribution system, to make contributions to employees unconditionally rather than, as is typical in the private sector, requiring a match.)”

    Discipline.

    Reply

    • Posted by Tough Love on August 17, 2019 at 9:45 am

      Stephen,

      Jane the Actuary” certainly understands the subject, but where she stated ……

      “It is likewise possible under either a Defined Benefit or Defined Contribution system for the state to promise a retirement benefit that meets its employees needs for adequacy while not overspending. ”

      I indeed took a double-take when I read that ………. asking myself , “what was she thinking”?. I believe that what SHE considers to be a pension benefit level that “meets it’s employees needs for adequacy”, (likely in addition to separate individual savings from the employee, and SS for most) is a great deal lower than what most Public Sector employees are now promised.
      —————————————

      And since you were quoting from the section of her article labeled “The bottom line is this”, how come you LEFT OUT the most important part, specifically where she wrote:

      “But it is only a Defined Contribution program that can wholly remove from legislators the temptation to ask (OK, require) future generations to pay for this year’s benefit accruals, sometimes leaving them with bills of such magnitude as to imperil provision of basic human services. ”

      Oh ……. it doesn’t support you biased views.

      Reply

  8. Posted by Anonymous on August 17, 2019 at 7:34 am

    Yes, it is also true that…

    “But it is only a Defined Contribution program that can wholly remove from legislators the temptation to ask (OK, require) future generations to pay for this year’s benefit accruals…”

    But at what cost?

    With the “discipline” mentioned above, or, with ERISA type pension “reform” that mandates that discipline, can a state, for the same cost, provide a retirement income greater than that provided by a DC system —and— guaranteed to last the life of the retiree?

    “And that, dear readers, is the purpose of pension reform.”

    Reply

    • Posted by Tough Love on August 17, 2019 at 9:56 am

      Looks like you got to that …………. lol

      But there you go again …………

      Sure, a DB Plan (with mortality-sharing advantages) can provide for the same cost greater retirement income a COMPARABLY generous DC Plan …………………..

      BUT and that is an ENORMOUS “but”, Current Public Sector DB Plans are so generous and hence so “costly” that our Elected Officials CLEARLY know that the Taxpayers would never accept the VERY high %-of pay DC Plan contributions that would be necessary to meet that generosity.

      As note in several prior comments, that annual DC contribution would need to be (for NJ policeman) 30%-of-pay, rising to over 40%-of-pay if COLAs are reinstated …….. and THAT is ONLY for the Plan’s “Normal Cost”.

      Reply

  9. Posted by Anonymous on August 17, 2019 at 8:13 am

    Hypothetical choice…

    A. Fifteen percent pay increase with Social Security and NO pension.

    B. No pay increase, Social Security plus fifteen percent of salary in 401 (k)

    C. No pay increase, Social Security plus fifty percent of final salary, guaranteed for life.

    If you choose B. —and— wisely invest, you could annually withdraw fifty percent of final salary. Maybe it will last the rest of your life. Maybe withdraw forty percent, just to be safe?

    How about it; do you feel lucky?

    That’s what deferred compensation is all about. I would choose C. I think it is better for me and for society as a whole.

    Those who choose A can fund their own retirement, or they can buy a better car, nicer house, annual vacation, eggs in their beer, you name it. I believe the data shows most of them choose the latter.

    Jane the Actuary. ..
    “It is entirely possible for a state or city to properly fund a Defined Benefit pension plan; it just takes discipline, …”

    Reply

    • Posted by Tough Love on August 17, 2019 at 10:03 am

      Baloney, not in NJ…………. where (for all workers taken together as one group ….. which we BOTH know is what financially impacts the Taxpayers) The PUBLIC Sector has a 23%-of-pay ADVANTAGE.

      Eliminate it and we’ve at “Equal”…………. THAT is the appropriate action.

      ———————————————-

      And why did you only quote the fist half of Jane the Actuary’s statement, her full statement being …….

      “It is entirely possible for a state or city to properly fund a Defined Benefit pension plan; it just takes discipline, plus either a risk-sharing design or a willingness to suck it up and pay more when the math requires it.”

      Yeah yeah. we know ……….. it supports YOUR biases better w/o it.

      Reply

      • Look in the mirror for a biased person. Mortality risks? I ask you again, what profession anywhere in the country asks people to respond to active shooter situations and then more often than not “Monday morning qb’s” their split second decisions? Do roofers or airline pilots get shot thrown at them or cursed or pushed in the streets or SHOT at? Do I have to also point out the very high suicide rate? Many many times the job just flat out sucks and the isittle or no support from the community (in certain areas) or elected officials. That, you dumb fuck, is why EVERY single PD in the country (except your Sunny Sorings maybe?) gets a pension. NJ happens to be an expensive state. So the pensions will be more. Without a pension, police would quit left and right. The pension is the holy grail for them. There is literally no comparable. Not one job in the country REQUIRES you to take on armed adversaries. In fact, not one job REQUIRES you to use force (but not too much or we will criticize you— I.e Warren calling Mike Brown a person who was murdered by a white cop.
        Huh? How many would do this line of work in NJ for $80,000 and no pension? How many qualified people anyway, that you would feel comfortable having on the force?
        Nothing in life is free TL.

        Reply

        • You want to compare a DPW guy to a private landscaper or a teacher to one in a private school be my guest. You literally can’t compare one to police work. Not one. Try as you may. You just do not like Authority. That’s all.
          My pension is here to stay. It won’t get cut and neither will my salary. S5 passed both parties unanimously!!! Why? Cause they realized they fucked up including us in with other pensions. No way!! You saw what happened when they laid off cops. They learned their lesson and laid off of us. Hence the path to progress and true 2% arbitration cap going bye bye. Law enforcement is a totally different dynamic than any other job out there.

          Reply

        • Posted by Tough Love on August 17, 2019 at 8:56 pm

          Quoting El gaupo ………

          (1) to me …. “you dumb fuck”

          (2) “NJ happens to be an expensive state. So the pensions will be more. Without a pension, police would quit left and right. The pension is the holy grail for them. There is literally no comparable.”

          So you’re finally admitting how ludicrously GENEROUS and hence ludicrously COSTLY your pension is ……….. you dumb fuck !

          Reply

          • Wrong again….the no comparable is to the private sector. You knew that and still haven’t provided me with a private sector comparable (which u feel my compensation should be based off of)
            As opposed to being market based and negotiable with my employer (which is how I feel my compensation should be based off of). My way includes comparing to other POLICE jobs. My way is how almost every single job in the country is compensation. They don’t compare an electrician to a carpenter. Do they! So yea…that’s how it should be. And FWIW, I take back the dumb F comment and apologize to you for it. 😐
            😉
            You’re probably not half as bad as you seem.

            Reply

          • Posted by Tough Love on August 18, 2019 at 12:09 pm

            Quoting El gaupo …………

            “My way”…. “My way” ……

            Exactly. Your way compares ONLY to other jobs (specifically Police) in which the compensation package from EVERY ONE of them is distorted by the Union (threats and campaign contribution) influence on self-interested, contribution-soliciting, vote-selling Elected Officials.

            The results of such Union/Elected -Official COLLUSION is anything BUT “Market Rate”.

            Reply

        • Posted by MJ on August 18, 2019 at 6:29 am

          E…did you call me a tool in this post? Out of line and inappropriate

          Reply

          • No. Not at all. I said (or at least meant) you and AZ treat me like a human being as compared to a certain someone on here Lol. You guys are both good people. Sorry if it came off that way. Certainly NOT my intention at all.

            Reply

          • I see how you would think that. I meant that “you know who” doesn’t let you guys (like Marcia) have an opinion that is the “wrong” one. And that she will come on and try to correct you. Should’ve been clearer. 😉
            Sorry about that. You sound like a really good guy.

            Reply

          • Posted by Tough Love on August 18, 2019 at 12:11 pm

            It’s become and E/MJ “kiss-fest” …………… lol

            Reply

      • Posted by Anonymous on August 17, 2019 at 4:38 pm

        Quoting TJ…

        “And why did you only quote the fist half of Jane the Actuary’s statement, her full statement being …….”

        Because… The second half includes the statement… ” or a willingness to suck it up and pay more when the math requires it.”

        Discipline…

        New York State has it, and it reduces costs overall. New Jersey doesn’t have it, so the vigorish just keeps growing like a cancer.

        Reply

        • Posted by Tough Love on August 17, 2019 at 9:13 pm

          NYS just “pays more” ……… simply means it been more successful at “suckering” it’s Taxpayers for the benefit of the few (the Public Sector workers).

          Reply

        • Posted by Anonymous on August 17, 2019 at 9:59 pm

          New York State pays higher pensions than New Jersey.
          New York taxpayers pay less than New Jersey.
          New York State is near fully funded and has been for years.
          New Jersey unfunded liability has been growing like the proverbial weed.

          Tell us again how excessive pensions are the root cause of underfunding.
          Tell us again which taxpayers are being suckered.

          Oh,

          Reply

          • Posted by Tough Love on August 17, 2019 at 10:50 pm

            Quoting …………

            “New York State pays higher pensions than New Jersey.
            New York taxpayers pay less than New Jersey.”

            You are looking at it for too short a period of time term, You need to look at the contributions over decades to make such observations.

            While it certainly was reckless on NJ’s part, how can NJ have paid MORE than NY when NY always pays (by law) the full ARC and for many years NJ contributed little to nothing?

            Screw your brain on.

            Reply

  10. Posted by Anonymous on August 17, 2019 at 5:17 pm

    On duplicity…

    Given the subject matter; converting from a DB to DC plan, and the concept of deceptive studies, and, coincidentally, another NIRS study…

    What is the consensus on the paper “Still a Better Bang for the Buck: An Update on the Economic Efficiencies of Defined Benefit Pensions”

    NIRS, 2014

    “The study calculates that the economic efficiencies embedded in defined benefit (DB) pensions enable these retirement plans to deliver the same retirement income at a 48% lower cost than 401(k)-type defined contribution (DC) accounts.”

    I understand many “experts” recognize that a properly run (loaded phrase) DB pension can produce a similar pension for a lower cost. Or a higher pension for the same cost as a DC plan.

    Even if you assume “the same retirement income at a 48% lower cost than 401(k)-type defined contribution…” is hyperbole, are there other estimates of the advantage?

    Other than NIRS, I have never seen it quantified. The best arguments I have seen for DC plans is less risk for taxpayers, and much more transparency.

    How much, really, less expensive is a DB plan (properly run, again) than a DC, for the same secure pension? Is it worth the risk?

    Reply

    • Posted by Tough Love on August 17, 2019 at 9:53 pm

      A great deal of what you are reading are half-truths……….

      Because of the mortality sharing element of DB Plans ………. wherein each participant agrees to the have ZERO left over when the participant (and if elected as an option, his/her spouse as well) dies, they can ignore the “risk” that they live beyond their tabular life expectancy because their DB pension WILL continue to make payments until death. In exchange, not only is nothing left when they die, but if they die at an age YOUNGER than their life expectancy (and many WILL) they and their estate will also get NOTHING back …. even if they die shortly after pension payments begin (under the straight life-annuity option).

      The “reason” the participants in such DB Plans can get MORE monthly retirement income for a given contribution level than in in say a 401K Plan, is almost entirely because the 401K plan participant SHOULD take LOWER withdrawals consistent with living LONGER than his tabular life expectancy (adjusted for known health issues).

      So here’s the “rub”, the 401K Plan participant is getting less if they do as I just described, but BECUASE of that, MOST will die with an account balance that can be bequeathed to their heirs. And not surprisingly to those who understand math, if the fees and investment earnings under the DB and 401KPlans are the same, the value of those 401kPlan assets remaining upon death is equal to the value of the incremental DB Plan pension payout.

      ———————–

      While many do indeed prefer the security of knowing that they can never run out of money, the DB Plan is NOT (short of materially lower fees and/or higher investment returns) mathematically a superior arrangement. It’s a matter of choose.

      Organizations like thew NIRS, which are VERY clearly biased in favor of Union workers/retirees will never tell you the complete story, only the part that supports their bias.

      Reply

    • Posted by Anonymous on August 17, 2019 at 11:45 pm

      There you go! I totally agree. (Never thought you’d hear that, hey?)

      It’s a matter of choose.

      When choosing a job, you can opt for lower take home pay in exchange for retirement security.
      Deferred compensation.

      Or you can manage your own retirement and, by investing wisely, and withdrawing conservatively, you may outlive your nestegg and leave the balance to your heirs. Or you could end up dependent on those heirs.

      They say 401(k)s work best for those who earn over $200,000 a year, (they say everything works better for those over $200k.)

      But for those of us who consistently earn below the average income, those retirement savings can quickly lose out to more immediate necessities. Not just on an individual level, but on a societal level.

      Public sector pensions are actually quite affordable, if properly managed, and keep a lot of seniors out of poverty.

      Reply

      • Posted by Tough Love on August 18, 2019 at 12:36 am

        Lol Stephen, you never miss an opportunity to twist the meaning of what I say.

        By choice, I clearly meant whether the retiree prefers the security of a life annuity with ZERO left upon death vs taking a lower level of withdrawals from a 401k Plan to take into account that you may live longer that your tabular life expectancy ……… but on average NOT doing so, thereby leaving an estate to your heirs.

        ———————————————————————–

        Then … lol ….. you go on to another misleading statement when it come to the PUBLIC Sector, saying ….

        “When choosing a job, you can opt for lower take home pay in exchange for retirement security.”

        NOooooo … or you can take a PUBLIC Sector job, MOST of which will give you “wages” VERY comparable to that of your your Private Sector counterparts AND (yes AND) MUCH MUCH richer than Private Sector pensions and benefits.

        A win-win for the Puublic Sector workers and a lose-lose for the Taxpayers.

        Reply

      • Posted by Anonymous on August 18, 2019 at 7:50 am

        ” Then … lol ….. you go on to another misleading statement…”

        Whyizzit when the good doctor says California workers have a 23 percent advantage in total compensation, you take it as immutable gospel, but when he says they have a twelve percent disadvantage in wages, he doesn’t know what he’s talking about?

        Reply

        • Posted by Tough Love on August 18, 2019 at 11:50 am

          Quoting Stephen Douglas (posting as Anonymous) ……..

          “Whyizzit when the good doctor says California workers have a 23 percent advantage in total compensation, you take it as immutable gospel, but when he says they have a twelve percent disadvantage in wages, he doesn’t know what he’s talking about”?

          ————————————————

          With the 12%-of-pay PUBLIC Sector worker “wage” DISADVANTAGE factored in as part of the 23%-of-pay PUBLIC Sector worker “Total Compensation” ADVANTAGE …………… isn’t that what really matter to CA Taxpayers. Clearly you are back to your tactic of trying to deflect attention from that VERY unjust compensation structure, that’s screwing CA’s Taxpayers.

          And, with this Blog’s focus being NJ ……….. in NJ while the Public Sector workers also have a 23%-of-pay “Total Compensation” ADVANTAGE, they only have a 4%-of pay “wage” DISADVANTAGE.

          Yeah, I call it reasonable to call that (as I did in my earlier comment) …..”wages VERY comparable to that of your your Private Sector counterparts AND (yes AND) MUCH MUCH richer than Private Sector pensions and benefits.”

          ================================
          Source, Figures 1 and 6 here:

          Click to access -biggs-overpaid-or-underpaid-a-statebystate-ranking-of-public-employee-compensation_112536583046.pdf

          Reply

      • Posted by Anonymous on August 18, 2019 at 8:12 am

        ” Then … lol ….. you go on to another misleading statement…”

        Whyizzit when I say “23 percent” is from data up to ten years old, you tell me about the PhD from the London School of Economics, and when the same PhD says…

        ” Salary growth in state and local government and public education has lagged that of the private sector. Over twenty years, average private sector wages rose by 15 percent above inflation while state and local government pay rose by 8 percent and public education by 5 percent.”

        You change the subject?

        Public sector salaries are now even lower compared to the private sector, and pensions have decreased in every state.

        #23% bulls hit

        Reply

        • Posted by Tough Love on August 18, 2019 at 12:01 pm

          Given the long time it takes to design, gather, vet, correspond/correct, perform the analysis, write the report, and have the report peer-reviewed and published, a data-period that is 5 years prior to the publication data is COMMONPLACE, not unusual.

          It was “published” in 2014 only 5 years ago. And the results presented in studies based on data as large and all-encompassing as this (including Public/Private/ 50 States, all element of compensation, etc.) change VERY VERY slowly. Again, your trying to mislead the readers, and given your PUBLIC Sector bias and history of doing such, it’s not one bit surprising.

          Reply

        • Posted by Anonymous on August 18, 2019 at 12:55 pm

          Peer reviewed?

          AEI Economic Policy Working Paper 2014-04

          “The AEI Economics Working Paper series is intended to make developing academic works available in preliminary form for comments and suggestions. ”
          ——————————————–
          “The Growth of Salaries and Benefits in the Federal Government, State and Local Governments and Public Education, 1998-
          2017”

          AEI Economics Working Paper April, 2019
          Andrew G Biggs
          ———————————————
          How long did it take to publish this paper?

          How much did the big data change since 2017?

          You have the chutzpah to compare someone to Trump?

          “all element of compensation, etc.) change VERY VERY slowly.”

          After the biggest recession in any of our lifetimes? Without that “change”, we would not even be discussing pensions now.

          Are you now saying Bigg’s 2019 paper is wrong? Does he still have a PhD from the London School of Economics?


          And they say the noise from windmills causes cancer.

          Reply

          • Posted by Tough Love on August 18, 2019 at 2:35 pm

            Oh, you are EXACTLY like Trump ………. in all the BAD BAD ways.

            Just the most recent lie read ……………. did you know, that on multiple occasions he claimed that he was awarded “Michigan man of the year” ? Trouble is, such an award doesn’t even exist.

            Reply

          • Posted by Tough Love on August 18, 2019 at 10:49 pm

            See my response to Stephen Douglas’s (posting under Anonymous) above-posted comment below and time-stamped August 18, 2019 at 9:39 pm

            Reply

  11. Posted by Anonymous on August 17, 2019 at 5:23 pm

    Off topic…

    Talk of duplicity brought my train of thought to this…

    https://www.urbandictionary.com/define.php?term=buy%20me%20honda%2C%20I%20love%20you%20no%20shit

    That was fifty years ago, but it sticks in the brain.

    Reply

  12. Posted by Anonymous on August 18, 2019 at 5:20 pm

    Back on topic…

    Me:

    “Is there any form of sharing longevity risk in a DC system? It seems like that is a big advantage for defined benefits.”

    Andrew Biggs:

    You can buy an annuity. But retirees are heavily annuitized through Social Security, so many may not think the additional longevity protection is worth the cost. (Plus annuities are complicated, etc.)
    ——————————-
    Ed Ring:

    “Hence there are two distinct virtues to defined benefit plans, both based on the fact that these plans allow large numbers of participants to pool their risk. This means that even though some participants may live longer than average, their income is secure their entire life, because by definition whoever collected more from the plan by living longer than average had their higher than average withdrawals offset by those whose lifespans were shorter than average. And because risk in a defined benefit fund is shared across generations of workers, during eras when investment returns are low, existing workers guarantee extra cash coming into the plan to keep it solvent, and during eras when investment returns are high, surpluses are fed into the pension fund that can also be used to make up the shortfall during lean years.”
    ————————————–
    Me, again:

    Risk sharing in the private sector…
    Two nearly identical workers, each with forty years working, at age 64 each has $600,000 in a 401(k).
    Worker A retires in 2007, and annuitizes his investments.
    Worker B retires in 2009, and, “shit! WTF?”
    —————————————
    As it happens, I retired in early 2009, totally oblivious to the strengths and weaknesses of the CalPERS systems. I had friends who started work with the state about the same time and age as I. Some retired before I did, and some after. We all did similar work, earned similar pay, and will receive similar pensions. Till we die.
    I agree with Ed Ring on this… Risk sharing is a feature of the system, not a bug.

    What about the taxpayers, especially Worker B, is it fair? Does that mean we should “reform” public pensions to “share the misery”? Of course not. Reform, yes, to make the system sustainable —and— minimize taxpayer costs.

    That is beneficial to both A and B.

    “Plus annuities are complicated, etc.”

    Reply

    • Posted by Tough Love on August 18, 2019 at 7:30 pm

      The “reason” we need to “reform” Public Sector DB pensions has little to do with DB vs DC. It’s because they are ludicrously excessive (INCLUDING on a Total Compensation basis) by any and every reasonable metric when compared to what COMPARABLE Private Sector works get (you know, the ones who PAY FOR 80% to 90% of the total cost of PUBLIC Sector pensions).

      Reply

    • Posted by Tough Love on August 18, 2019 at 7:33 pm

      Anyone who CHOOSES buys an immediate payout annuity from a Private Annuity provider (from lump sum retirement accumulation or payout) at today’s VERY VERY low interest rates is an IDIOT and VERY poorly advised.

      Reply

    • Posted by Anonymous on August 19, 2019 at 1:16 am

      Whether Worker B bought an annuity is irrelevant. Worker A locked in his pension and B, equal in every other way, got the shaft, through no fault of his own. A properly governed DB plan would prevent that.

      Ludicrously excessive rant. There are thousands of public workers in California, and hundreds of thousands across the nation, who are either UNDERpaid, or roughly equal to similar private sector workers.  (INCLUDING on a Total Compensation basis). “Reforming” (AKA reducing) pensions for those employees will only make recruitment and retention more difficult. It is already happening.

      The “average” compensation may be useful for comparison of state to state employee costs, but useless for designing effective reform.
      “What really affects the taxpayers” is not a knee jerk across the board reduction.

      Reply

      • Posted by Tough Love on August 19, 2019 at 8:33 am

        That “properly governed Plan would simply have passed along B’s losses to the Taxpayers.

        THEY are the ones who’ve ALWAYS gotten “the shaft” when it comes to PUBLIC Sector DB Pension Plans. Primary reason ……… they’re excessively generous (INCLUDING when comparisons are made to Private Sector workers on a Total Compensation basis).

        Reply

  13. Posted by Tough Love on August 18, 2019 at 9:39 pm

    This comment is response to Stephen Douglas’s (posting under anonymous) above time stamped August 18, 2019 at 12:55 pm.

    In that (and many other comments) he calls the AEI Study authored by Dr. Andrew Biggs obsolete or dated because, while being published only 5 years ago in 2014, the data upon which the study result are based is about 10 years old.

    I already responded to his position saying:

    “It was “published” in 2014 only 5 years ago. And the results presented in studies based on data as large and all-encompassing as this (including Public/Private/ 50 States, all element of compensation, etc.) change VERY VERY slowly. ”

    I believe that to be accurate, personally having been a working participant in many such large-data studies, including having a major role in writing some of the reports.

    Stephen did make one correct observation that I missed, Dr. Biggs 2014 study was presented as a “working paper” and hence was not “peer reviewed” before publication.
    ———————————————-
    In Stephen Douglas’s above-referenced comment, he goes on to reference a much more recent study authored by Dr. Biggs. That study is titled … “The Growth of Salaries and Benefits in the Federal Government, State and Local Governments and Public Education, 1998-2017” and can be found here:

    http://www.aei.org/publication/the-growth-of-salaries-and-benefits-in-the-federal-government-state-and-local-governments-and-public-education-1998-2017/

    Stephen goes on to say:

    “Are you now saying Bigg’s 2019 paper is wrong? Does he still have a PhD from the London School of Economics?”

    By Stephen saying “Are you now saying Bigg’s 2019 paper is wrong? ” it certainly appears that he is suggesting that Dr. Biggs’ new study supports a change from or different result/conclusion than his earlier study (the one published in 2014).

    I pasted just below the “Abstract” for Dr. Biggs new study:
    ———————————————————————
    “Abstract

    Policymakers are concerned with the growth of public sector compensation bills, while many public employees believe their pay has fallen behind private sector levels. Public sector managers are concerned with offering competitive salary and benefit packages that will allow them to attract and retain employees. Public-private pay comparisons often are conducted using government household survey data. While household surveys provide essential information on public sector salaries and worker characteristics such as education, experience and occupation, those surveys lack information on employee fringe benefits, which are of increasing cost and importance in the public sector. Data from the National Income and Product Accounts (NIPA) published by the U.S. federal government can fill those gaps. The NIPA data include more accurate information on the fringe benefits, including future pensions, being accrued by employees. NIPA salary and benefit data for employees in the private sector, federal government, state and local government and public education make it possible to track changes in total compensation over the past two decades. Average inflation-adjusted salaries grew at similar rates in the private sector, state and local government and public education, while growing significantly more rapidly in the federal sector. Benefits, including pension accruals, grew substantially faster in the public than the private sectors. As a result, total compensation from 1998 to 2017 grew somewhat more quickly in state and local government and public education than in the private sector, while growth of federal employee compensation far outpaced the other sectors. NIPA regional data make it possible to analyze the growth of state and local government employee compensation by state. There is considerable variation from one state to another. However, there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. The NIPA data also include the value of annual employee pension accruals in state and local pensions. The median state in 2017 provided an employer-funded pension benefit worth 14 percent of employee wages. From 1998 to 2017 the median state and local pension plan became about 13 percent more generous, though with considerable variation from state to state. Pensions became more generous in about three-quarters of states, while in one-quarter of state employee pension accruals declined from 1998 to 2017.”
    —————————————————————————————–

    Now let’s keep one thing in mind…………… likely 99+% of the pension or compensation-related discussions on John Bury’s Blog focus on PRIVATE Sector and STATE & LOCAL Public Sector workers, NOT FEDERAL Gov’t employees. It would be difficult (and certainly disingenuous) for Stephen to disagree.

    Yet by stating …….. “Are you now saying Bigg’s 2019 paper is wrong? ” …… how can the reader think anything but that he is implying that Dr. Biggs new study came to a different conclusion (re Private Sector pensions & compensation vs those of State & Local Public Sector workers) than his earlier study, and one that supports HIS position that the material Public Sector Total Compensation ADVANTAGE shown (23%-of-pay in CA and NJ) in Dr. Biggs earlier study is no long true?

    So I figured, lets take a look at Dr. Biggs new study (see the “Abstract” above).

    Included in that Abstract is the following (re the past 2 decades):

    “Average inflation-adjusted salaries grew at similar rates in the private sector, state and local government and public education, while growing significantly more rapidly in the federal sector. Benefits, including pension accruals, grew substantially faster in the public than the private sectors. As a result, total compensation from 1998 to 2017 grew somewhat more quickly in state and local government and public education than in the private sector, while growth of federal employee compensation far outpaced the other sectors.”

    That Abstract also includes the following:

    ” …. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”
    ——————————————————–

    So is it that Stephen has a reading comprehension problem, is just outright lying, or is basing his claims SOLELY of the improvement in FEDERAL employee compensation, while conveniently (A) not stating such, and (B) ignoring that this Blog’s posts and commentary VERY VERY VERY rarely discuss FEDERAL employee compensation, but focus on comparisons of Private Sector vs PUBLIC Sector State and Local employee compensation.

    Looks like Stephen Douglas has simply been caught posing ANOTHER misleading and disingenuous comment.
    ————————————————————–

    P.S. Stephen ……………. yes Dr. Biggs STILL has his PHD from The London School of Economics, and you are still simply a retired CA Public Sector light-bulb-changer.

    Reply

  14. Posted by Anonymous on August 19, 2019 at 12:32 am

    Sure, let’s go there again.

    I have said many times that Biggs study is the outlier (and dated, I call bulls hit on your “big data changes very VERY slowly.) That’s OK, there are dozens of comparisons with at least as many different conclusions but why is Biggs public sector advantage so much higher?
    Yes, I still highly recommend his 2014 study, for several reasons. The wage portion of his study is very close to Munnell and others using the human capital model. They should be, they use the same data sources and basically same methodology.
    So why, nationwide, does Munnell say total compensation is roughly equal, while Biggs computes about a ten percent state worker advantage. I believe in California,  Allegretto and Keefe study found about a seven percent public sector wage disadvantage, but “no significant difference in the level of employee compensation costs…”

    Main reason, Biggs, to adjust for risk free rates, adjusts to a 4.3 percent discount rate. Well and good, he explains his reasoning very well. Munnell and, I believe Keefe also, use 6.25 percent to discount the future value. Big difference. We can always debate that later. Why does Biggs use 4.3? It’s “the average yield over the past decade on 20-year Treasury securities. This is designed to reflect the typical accruals of benefits over the past decade.”

    Now, grasshopper, why am I not misleading you?

    As I said, and Biggs confirmed, public wage growth has lagged the private sector. Other sources agree that pension formulas have decreased, employee contributions have increased, a double whammy for public employees, in absolute dollar terms. Pension “generosity” has decreased. So why does Biggs say “…. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”

    Spoiler alert, remember 4.3 percent “the average yield over the past decade on 20-year Treasury securities.”? THE reason Biggs total compensation is the outlier.

    Look at the chart, what discount rate might he have used to value pensions in 1998, as opposed to 2017?

    Comparative public wages have decreased. Absolute values of pensions have decreased (inflation adjusted.) What —has— increased is the risk adjusted cost of pensions in the last twenty years. Had he compared the costs in the last ten years, 2008-2018. I believe public compensation would have lost ground.

    My reading comprehension is fine. My Mother had me tested.

    I don’t plan on going anywhere soon. If you should decide to discuss this in a civilized manner, you know where to find me, sir.

    Reply

    • Posted by Tough Love on August 19, 2019 at 1:00 am

      (1) Quoting ……….

      “That’s OK, there are dozens of comparisons with at least as many different conclusions but why is Biggs public sector advantage so much higher?”

      Show us the data from those dozens ………. your WORD is not enough or reliable.

      (2) quoting …………

      “So why, nationwide, does Munnell say total compensation is roughly equal,”

      Ask her and then get back to us with published data. YOUR word is nor reliable.

      (3) Quoting ……….. “I believe in California, Allegretto and Keefe study found about a seven percent public sector wage disadvantage, but “no significant difference in the level of employee compensation costs…””

      Really, “you believe” ???? YOUR word is not reliable.

      (4) Quoting …………. “Main reason, Biggs, to adjust for risk free rates, adjusts to a 4.3 percent discount rate. ”

      First of all 4.3% is a LOT higher than the current “risk-free” rate.

      A 4.3% rate is close to what Private Sector pensions use in discounting their DB Plan liabilities. If it’s appropriate for use in the valuation of PRIVATE Sector Plans it’s appropriate for use in the valuation of PUBLIC Sector Plans, NOT the 7% to 8% rate commonly used by PUBLIC Sector Plans DELIBERATELY understating their’ Plans true liabilities.

      (5) Quoting ……………. “As I said, and Biggs confirmed, public wage growth has lagged the private sector. ”

      As you said , really ???? Source please. Biggs RECENT study (that YOU brought up) says exactly the OPPOSITE for Private vs State/Local Public Sector workers. Only FEDERAL employees wages/compensation has increased faster, and we both know discussion of FEDERAL employees wages/compensation VERY rarely part of the pension/compensation discussions on this Blog.

      Misleading again, or lying ?

      (6) quoting ……….. “Other sources agree that pension formulas have decreased,”

      Sure, but 95+% of those formula decreases ONLY apply to NEW workers (liek in CA and NJ), VERY VERY VERY rarely including the future service of CURRENT workers ……… making any material savings FAR off into the future.

      Forgot to mention that, or deliberately misleading, AGAIN.

      (7) quoting ……….

      “So why does Biggs say “…. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”

      Because HE (being a super-credentialed PHD economist) is assuredly correct, and YOU have your Public Sector Union/worker/retiree biased head up your ass. Given your outright attempts to mislead, that’s as “civilized” as you deserve

      Reply

    • Posted by Anonymous on August 19, 2019 at 1:50 am

      (5) Quoting ……………. “As I said, and Biggs confirmed, public wage growth has lagged the private sector. ”

      As you said , really ???? Source please. Biggs RECENT study (that YOU brought up) says exactly the OPPOSITE for Private vs State/Local Public Sector workers. 

      Biggs:. (page 22)

      “Salary growth in state and local government and public education has lagged that of the private sector. Over twenty years, average private sector wages rose by 15 percent above inflation while state and local government pay rose by 8 percent and public education by 5 percent. “

      Reply

      • Posted by Tough Love on August 19, 2019 at 2:21 am

        In Biggs 2019-study abstract he wrote,

        ” Average inflation-adjusted salaries grew at similar rates in the private sector, state and local government and public education, while growing significantly more rapidly in the federal sector. ”

        Perhaps because it’s over a 20-year period, he considers the lower Public Sector “wage” (ONLY) growth that you noted on p22 of the full study to be inconsequential.

        Notably, in BOTH the abstract and in the full study he writes that because of the substantially greater PUBLIC Sector growth in benefits, including pension accruals, State and Local PUBLIC Sector Total Compensation grew somewhat more quickly than in the Private Sector.

        Specifically, the following is included in the Abstract:

        “total compensation from 1998 to 2017 grew somewhat more quickly in state and local government and public education than in the private sector…”,

        And the following is included in the full Report on P23:

        “The faster growth of public sector benefits made up for slower salary growth in state and local government and public education, allowing for slightly faster growth of total compensation. “

        Reply

    • Posted by Anonymous on August 19, 2019 at 1:58 am

      Quoting

      “Sure, but 95+% of those formula decreases ONLY apply to NEW workers (liek in CA and NJ), VERY VERY VERY rarely including the future service of CURRENT workers ……… making any material savings FAR off into the future.”

      Over thirty percent of California workers are “new workers”, and increased employee contributions apply to all employees. Mine went from $2,500 to $5,000 a year, and that was ten years ago.

      Reply

      • Posted by Tough Love on August 19, 2019 at 2:35 am

        Every time a pension formula is changed in the PUBLIC Sector it VERY VERY rarely impacts anyone but new employees hired after the effective date of the change. Sure, as years pass (with more workers hired and older/long-service workers retiring), the % of all employees under the new (lower) tier will grow. There is noting magical or unexpected about that.

        But importantly …… and polar opposite to PUBLIC Sector practices ……. the vast majority of Private Sector DB pension Plan formula reductions include the FUTURE Service of almost all CURRENT workers.

        Why should Public Sector workers not only get richer pensions (in BOTH formula AND provisions), but also better protections from reduction than the Taxpayers who pay their way ?

        Yeah yeah yeah, we know …………. “it’s invalid to only compare pensions”.

        Well Biggs isn’t. His 2014 Study showed that on a TOTAL COMPENSATION basis Public Sector workers have a MATERIAL advantage (that pesky 23%-of pay) over their Private Sector counterparts, and per his 2019 Study, that Public Sector ADVANTAGE is now somewhat GREATER.

        Reply

      • Posted by Anonymous on August 19, 2019 at 5:15 am

        ” Public Sector workers have a MATERIAL advantage (that pesky 23%-of pay) over their Private Sector counterparts, and per his 2019 Study, that Public Sector ADVANTAGE is now somewhat GREATER.”

        Well, not necessarily.
        The notorious 23% was for the period 2008-2012. The increases discussed in this paper were for a twenty year period, 1998-2017. But it was not a straight line growth. (Or decline, in some cases.)

        Biggs
        ” The 2000 to 2016 period encompassed both some pension benefit
        enhancements enacted early in the period and subsequent pension retrenchments, including both less generous benefits for newly-hired employees and higher employee contributions, often for both current employees and new hires.”

        NJ is a prime example. Normal costs, according to Biggs, increased from 11 percent of wages in 2000 to 15 percent of wages in 2010. Then decreased again to 9 percent in 2016.

        Even better, it appears that in 2000, NJ was one of the least generous pension states in the country, at 34th place. Dropping to 47th least generous in 2016.

        “At the same time, the decline in safe interest rates over the 2000 to 2016 period made a guaranteed pension benefit both more costly to providers and more valuable to employees.”
        ( From 1998 through 2000, the NIPA calculations continued to use a 7 percent nominal discount rate in calculating the value of pension normal costs. From 2000, the NIPA discount rate began a gradual decline, reaching 5.25 percent in 2010 and 4 percent beginning in 2013.)

        Reply

        • Posted by Tough Love on August 19, 2019 at 11:08 am

          Quoting …………….

          ” Public Sector workers have a MATERIAL advantage (that pesky 23%-of pay) over their Private Sector counterparts, and per his 2019 Study, that Public Sector ADVANTAGE is now somewhat GREATER.”

          Well, not necessarily.
          The notorious 23% was for the period 2008-2012. The increases discussed in this paper were for a twenty year period, 1998-2017. But it was not a straight line growth. (Or decline, in some cases.)”

          ——————–

          Wow, what a S*T*R*E*T*C*H. No matter how strong and clear the evidence you just cannot come to terms with, and ADMIT that State & Local PUBLIC Sector Total Compensation (for all such workers taken as one group) is materially greater than that of comparable PRIVATE Sector workers.

          And then the followup weaseling to deny, deny, deny.

          Reply

          • Posted by Anonymous on August 19, 2019 at 2:16 pm

            “State & Local PUBLIC Sector Total Compensation (for all such workers taken as one group) is materially greater than that of comparable PRIVATE Sector workers.”

            More gaslighting.

            “… the results of studies based on very large amounts of data encompassing multiple year spans …………. change very VERY slowly.”

            Bulls hit.

            Ironically, although the absolute values of wages can change very VERY quickly, the concept of wage compression probably does not. For decades, there has been a floor on public sector compensation, and a ceiling on the top end.

            “Borjas (2002) investigated the changes in wage gap due to the changing wage structure. His evidence suggests that public sector workers in high-skilled groups are more likely to quit the public sector and enter the private sector under the circumstance of the relative compression of wages in the public sector. Thus, over time, the public sector should find it increasingly difficult to attract high-skill workers from private sector positions, and retain high-skill workers.”

            That is a consistent theme in every state and most OECD countries. Yes, THAT relationship is changing very VERY slowly, and yes, that should be a a concern to the taxpayer.

            Google:

            “U.S. teacher shortage”…About 30,300,000 results (0.78 seconds)

            “U.S. police shortage”…About 56,400,000 results (0.70 seconds)

            “taken as one”?

            Reply

      • Posted by Anonymous on August 19, 2019 at 5:26 am

        Wait, where have I heard that before?

        New Jersey Public Pensions Rank
        Among Least Generous in the Nation

        NJPP, December 13, 2017

        I wonder if El gaupo knows about this.

        Reply

        • Posted by Tough Love on August 19, 2019 at 11:12 am

          Union supported group ??????????????????

          Biased ???????????????

          Shouldn’t we be comparing NJ pensions NOT to those of other OVERCOMPENSATED “PUBLIC” Sector workers but to the retirement security granted comparable PRIVATE Sector workers WHO PAY FOR 80% to 90% of the total cost of PUBLIC Sector pensions ???????????

          Reply

        • Posted by Anonymous on August 19, 2019 at 1:00 pm

          “Union supported group ??????????????????”

          Which managed to come up with results eerily similar to Dr. Biggs??????????????

          Biased ???????????????

          Reply

      • Posted by Anonymous on August 19, 2019 at 5:46 am

        Now we’ve come full circle.

        Biggs says public wages have not kept up with private since 2000.

        In the same paper, Biggs says there have been pension retrenchments, “including both less generous benefits for newly-hired employees and higher employee contributions, often for both current employees and new hires.”

        Particularly in New Jersey, apparently. I would say that means there is a good chance that pesky 23%-of pay ADVANTAGE is now somewhat LESS.

        Seriously, 47th least generous?

        Reply

        • Posted by Tough Love on August 19, 2019 at 11:15 am

          Really ??? ……… and you LEAVE OUT Dr. Biggs MOST important conclusions:

          “Average inflation-adjusted salaries grew at similar rates in the private sector, state and local government and public education, while growing significantly more rapidly in the federal sector. Benefits, including pension accruals, grew substantially faster in the public than the private sectors. As a result, total compensation from 1998 to 2017 grew somewhat more quickly in state and local government and public education than in the private sector, while growth of federal employee compensation far outpaced the other sectors.”

          and

          ” …. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”

          Reply

        • Posted by Anonymous on August 19, 2019 at 3:00 pm

          ” …. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”

          That’s a feature, not a bug.

          Ed Ring…

          “And because risk in a defined benefit fund is shared across generations of workers, during eras when investment returns are low, existing workers guarantee extra cash coming into the plan to keep it solvent, and during eras when investment returns are high, surpluses are fed into the pension fund that can also be used to make up the shortfall during lean years.”

          Go back to our friends, Worker A and Worker B. The reason state and local government employee compensation did not lose ground relative to private sector compensation was not due to the discrete generosity of pensions, it was due to the changing discount rates used to value those pensions.

          ( From 1998 through 2000, the NIPA calculations continued to use a 7 percent nominal discount rate in calculating the value of pension normal costs. From 2000, the NIPA discount rate began a gradual decline, reaching 5.25 percent in 2010 and 4 percent beginning in 2013.)

          “share the risk”! two similar workers separated by several years will still receive similar pensions for similar work. Yes, due to the different discount rates, “cost” will vary from time to time, but they should balance each other out through various economic cycles. (Here is a good place to implement “reform”, by allowing pensions to remain overfunded [no employer “holidays”] during up cycles, to fill in during recessionary cycles.) Like PEPRA in California.

          Reply

          • Posted by Tough Love on August 19, 2019 at 5:02 pm

            No, given your non-stop attempts to distract, to mislead, to obfuscate, and lie, You are the “bug” we need to contain.

            Reply

      • Posted by Anonymous on August 19, 2019 at 5:58 am

        ” all element of compensation, etc.) change VERY VERY slowly. ”

        Just keep repeating that.

        “There was no collusion with Russia. There was no obstruction, and — none whatsoever. And it was a complete and total exoneration,”

        See how that works out for you.

        Reply

        • Posted by Tough Love on August 19, 2019 at 11:19 am

          Yes, the results of studies based on very large amounts of data encompassing multiple year spans …………. change very VERY slowly.

          Without question !

          Clearly you have zero experience and know “squat” about this.

          Reply

        • Posted by Anonymous on August 19, 2019 at 12:54 pm

          “Yes, the results of studies based on very large amounts of data encompassing multiple year spans …………. change very VERY slowly.”

          “data”,”spans”,”studies”. yadda, yadda, yadda…

          I know what gaslighting is…

          “gaslighting”
          verb
          manipulate (someone) by psychological means into questioning their own sanity.
          (i.e.,constant repetition of unsupported theories.)

          Put your studies where the sun don’t shine. We are talking about WAGES, which do not change slowly, especially during and after the Greatest Recession.
          We are talking about pension retrenchments, “including both less generous benefits for newly-hired employees and higher employee contributions, often for both current employees and new hires.”

          If an employee contribution increases from 5 percent of salary to 10 percent of salary in one year, there is nothing slow about that. Ask me how I know.

          And the noise from windmills do not cause cancer.

          Reply

          • Posted by Tough Love on August 19, 2019 at 1:18 pm

            No Stephen, you were a light-bulb-changer, and you no NOTHING about the effort, the time, the design, the data-vetting, and the analysis involved in preparing such studies and reports. I do, having done many over a many years.
            ————————-

            Quoting …………….. “We are talking about WAGES”

            lol …………. you’ve been YAPPING over and over that ONLY comparisons of Total Compensation (NOT the individual components of wages or pensions or benefits) are relevant, and now all of a sudden it just “WAGES”?

            Really ???????????

            Reply

          • Posted by Anonymous on August 19, 2019 at 2:31 pm

            Oh, SNAP!

            I been busted.

            You right, pension “formulae” do change more slowly than wages.

            Except, “Over twenty years, average private sector wages rose by 15 percent above inflation while state and local government pay rose by 8 percent and public education by 5 percent.”

            If wages grew more slowly, then pensions grew more slowly, also, since they are a function of those wages.

            Really!

            Reply

          • Posted by Tough Love on August 19, 2019 at 4:59 pm

            Doesn’t matter.

            Per your own REPEATED yapping, ONLY Total Compensation matters. In Dr.Biggs 2014 study, the PUBLIC Sector had a VERY material %-of-pay ADVANTAGE …. you know that pesky 23%-of-pay Total Compensation ADVANTAGE in CA and NJ ……… which, per Dr. Biggs 2019 Study is now even GREATER.
            ————-

            Yes, REALLY !

            Reply

  15. Posted by Anonymous on August 19, 2019 at 12:45 am

    I said nothing about federal compensation. Yes, I read that paragraph and it’s interesting that Federal employees have consistently had higher wages and higher total compensation than either state or local workers. And the advantage has increased in the last decade. But that is not part of this discussion.

    However…

    off topic?

    While perusing one of Bigg’s articles, I did come across an interesting tidbit…

    “In its analysis of pension compensation for federal government employees, the Congressional Budget Office used an interest rate of 5 percent, approximately 1 percentage point above the Treasury yield, “because federal pension obligations are not protected by the constitution.”

    I did not know that. I wonder if the federal workers/retirees are aware of this.

    Reply

    • Posted by Tough Love on August 19, 2019 at 1:07 am

      What’s MORE interesting is HOW, from the Bigg’s more recent study (an “Abstract” of which is pasted above in an earlier comment), ANYONE (who does not have a reading comprehension problem, is not looking to mislead the readers, or is not outright lying) could come up with what YOU stated:

      “Are you now saying Bigg’s 2019 paper is wrong? Does he still have a PhD from the London School of Economics?”

      Reply

    • Posted by Anonymous on August 19, 2019 at 6:11 am

      No misleading here, sir. No lie.

      You assert that the Bigg’s 23% advantage is still true.

      And Biggs says public wages have not kept up with private sector wages.

      They are mutually exclusive. They can not both be true.

      May be it’s a different Biggs?

      Reply

      • Posted by Tough Love on August 19, 2019 at 11:23 am

        Wrong. Biggs stated that the State & Local Public Sector Total Compensation has only gotten GREATER since his earlier study. Again, quoting from his most recent study…………

        “Average inflation-adjusted salaries grew at similar rates in the private sector, state and local government and public education, while growing significantly more rapidly in the federal sector. Benefits, including pension accruals, grew substantially faster in the public than the private sectors. As a result, total compensation from 1998 to 2017 grew somewhat more quickly in state and local government and public education than in the private sector, while growth of federal employee compensation far outpaced the other sectors.”

        and

        ” …. there was no state in which average state and local government employee compensation lost ground relative to private sector compensation from 1998 to 2017. ”
        ————————————-

        Clearly Misleading AGAIN.

        Reply

  16. Posted by MJ on August 19, 2019 at 6:41 am

    TL…no “kiss fest” with El Gaupo. Unlike you I don’t think about the pensions day and night. I’m not angry about it and at times you seem to be in a rage. If they get paid in full great if they don’t everyone will adjust. And I can discuss things without name calling, cursing and ranting and raving.

    I’ve stated many times that other than inner city/urban cops IDK if sleepy town cops are overpaid or not as I have never done the job but I do feel that cops everywhere have to deal with stuff that we know nothing about. Their pensions are probably a bit overly generous but E does seem to state honestly that they pay in a portion for benefits and pensions and it has gone up since 2011. I don’t mind having a few extra cops in my town bc I don’t want to live in chaos, crime and feeling unsafe.

    Heck, if disgusting Bob Menendez can get re-elected in this state well then I think anything can happen. Hopefully, I won’ be around to see it. I like E’s philosophy, make your money here and then move on to a more tax friendly state. Even PA is better than NJ and their pension is broke according to my public worker friends who live there.

    Reply

    • Posted by Tough Love on August 19, 2019 at 12:11 pm

      Certainly reads like a kiss-fest.

      I’m not angry, in a rage, etc.

      Perhaps unfortunately, I’m VERY knowledgeable about the design and TRUE cost of DB pension promises, and find it beyond objectionable as to how the Public Sector Unions and our Elected Officials have successfully COLLUDED to monumentally rip-off the Taxpayers.

      —————–

      Quoting ………

      “their pensions are probably a bit overly generous but E does seem to state honestly that they pay in a portion for benefits and pensions and it has gone up since 2011. ”

      It’s hard to believe you are “falling” for that garbage. What “matters” is what is the best-estimate cost to TAXPAYERS (expressed as a level annual %-of-pay contribution) necessary to fully fund their pension over their working career, vs what is MOST commonly contributed BY THE EMPLOYER into a Private Sector worker’s 401K Plan.

      For El gaupo’s pension that level annual figure is 30% vs typically 3% into a 401k Plan……. 10 times greater !

      That’s WAY different than ….”a bit overly generous”

      Please, you don’t have to believe me if my 30% figure (just for the Taxpayer share) is reasonable for someone retiring in their early 50s with a 65% of final pay pension, ask Mr. Bury.

      Reply

      • Posted by Tough Love on August 20, 2019 at 1:36 am

        And FWIW, in Calif., where Police pensions are a COLA-increased 90% of final pay after 30 years, and with the Police Officers contributing about 10% of pay, the level annual expected TAXPAYER cost for someone retiring in their early/mid 50 approaches 50%-of-pay……….. vs typically 3% for Private Sector workers in a 401K Plan.

        How’s THAT for outrageous ?
        ————————————

        Hey Stephen Douglas Douglas, you’re from CA. Are you OK with these off-the-wall rich pensions?

        Reply

      • Posted by Anonymous on August 21, 2019 at 10:27 pm

        Yes.

        Most of the hype is about upper level management, some of whom had pensions in the $200,000 range. And the biggest problem there was optics. It’s easy for most average income folks to envy that. They don’t realize a sheriff or police chief is high level management Many do have college degrees and ongoing education and training. With continual advancement and increasing levels of responsibility, the same man could have promoted in many private sector management jobs to levels of compensation far above the “ceiling” on public sector jobs.
        With 20/20 hindsight, legislation might have capped pensionable pay (which they finally did in 2013 with PEPRA.)

        That’s in line with Ed Rings advise:
        “Impose a ceiling on pension benefits to retirees, based on the principle that pensions are supposed to ensure retirement security, not lavish affluence. Similarly, establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.”

        This very well might require increasing the wages of those to compensate for the lower benefits.

        Police pensions will always be more costly than others because of early retirement. It’s useless to compare the “risks” of officers. For decades police and military in this and other countries have had early retirement. Often “twenty and out” (with fifty percent of FAS) for the troops and one hundred percent at forty for those who can promote to management. (See 1947 Hook Commission)

        People who are outraged at pensions (and salaries) always, ALWAYS, refer to those in the coastal cities. Those in the Central Valley and foothills just don’t have the shock and awe.

        Reply

        • Posted by Tough Love on August 21, 2019 at 11:01 pm

          TL asks:

          “Hey Stephen Douglas Douglas, you’re from CA. Are you OK with these off-the-wall rich CA Police pensions?”

          Stephen Douglas responds”

          Yes
          —————————–

          FYI …………. Their (3%@30=90% of final pay) pensions require that level annual taxpayer contribution of about 50% of pay (just to fund the NORMAL COST) for ALL of those officers REGARDLESS of their income level.

          Reply

        • Posted by Anonymous on August 22, 2019 at 12:35 am

          FYI…………………
          3%@50 is passé. The new formula is 2% at Age 50 ….. 2.7% at Age 57 and older.

          And I’m pretty sure “what is the normal cost of my pension” is not on the list of questions the applicants are asking. If Hayward is losing officers, they can either raise their wages or lower their standards. For the right price, Pleasanton cops will commute 30 miles a day.

          You can read the articles, there is a national shortage of police.
          It’s the market.

          Reply

          • Posted by Tough Love on August 22, 2019 at 6:28 pm

            Quoting ………..

            “3%@50 is passé. The new formula is 2% at Age 50 ….. 2.7% at Age 57 and older.”

            Yeah, but that ONLY applies to Police hired AFTER the PEPRA Law in CA (2001, I believe). Likely, 2/3 + of the current Police are STILL accruing pensions on 3%/yr formula….. and will CONTINUE to do so for the remainder of their careers, which for some will be 20+ MORE years.

            It NEVER works that way (re pensions changes) in the Private Sector and it’s shouldn’t in the PUBLIC Sector.
            ———————

            Categorize that comment under ……. “misleading” (AGAIN)

            Reply

          • Posted by Tough Love on August 22, 2019 at 7:33 pm

            I certainly Should have added ……………….

            CA Police hired since 2001 under PEPRA will simply work until age 57 to get the 2.7% per years of service instead of the 2.0% (for lesser service). Most need to work (if not “to”) “close to” 57 to get 30 years in anyway, so the real change is simply going from 3% to 2.7%.

            To fully fund just the NORMAL COST of CA’s COLA-increased 3%@50 pension over the Police Officer’s working career requires a level annual TAXPAYER contribution (IN ADDITION TO the Officer’s own contribution) of about 50% of pay. Given that the age won’t have much impact (because most Officers will be at or very near age 57 after 30 years anyway), the 2.7% pension costs almost (2.7/3.0) or 90% of the prior pension’s cost.

            So “BIG WHOOP” the older pension cost Taxpayers a level annual 50% of pay, and the new one will cost Taxpayer about a level annual 90%x50%=45% of pay ……… vs the 3%-of-pay that Private Sector workers typically get from their employer’s into a 401K Plan.

            Yup, under the REDUCED Police pensions, CA Police Officers will now “ONLY” be getting 45%/3% = 15 TIMES what Private Sector Taxpayers typically get.

            Taxpayers have been Sooooooooooooo hoodwinked by the Public Sector Union/Elected-Official COLLUSION/RACKETEERING/BRIBERY going on right under of their noses.

            Reply

  17. Posted by anon on August 19, 2019 at 7:49 am

    I feel like the right answer is something that will always remain elusive, but that hopefully we will get closer to. Personally, my big conflict lies between two things that I believe:
    1. People should not be managing the assets that they need for basic needs in retirement (we can debate over what that level is, but basically some amount associated with at least having shelter and food and perhaps more than just subsistence).
    2. I question the appropriateness of government taking on risk premiums conceptually, this seems like it really is the role of the individual tax payers.

    On some level it seems like it would make sense to really redesign our national retirement program that is currently in the form of Social Security with a goal of making it such that it makes sense to fully meet the basic needs in retirement and that all other retirement income would make sense to just be individual accounts. With this, would want to make Social Security universal and not exempt some public employees, religious, or anyone else.And also get rid of WEP and the like running the new Social Security independently.

    But that seems a harder goal and so we are living in a world where there is a quilt of retirement programs that are combined to try to be a “three-leg stool.” In that world, where there are public employees without Social Security and where there Social Security isn’t necessarily designed to meet the survival level of support, it makes sense to think about the nature of public retirement systems.

    DC only programs result in members having to manage their own assets needed for survival in retirement, needing to manage their drawdown to their oldest possible date rather than their average expected date of survival, much higher investment fees, inefficient glide paths, inability to access many investments, and other faults.

    DB only programs result in serious moral hazard in the management of the programs, tendencies to delay addressing issues, potential for adverse selection and gaming of the systems, great uncertainty about costs and obligations, and puts the government in the business of investment. the

    I know of no answer that addresses all of these issues. But there ARE programs that do a better job. For example, the cash balance programs of the agent pension plans in Texas for municipalities that have been around since the 50s. Also the emerging systems in places like South Dakota and Maine joining some of the ideas of Wisconsin and others in developing policies to manage and share adverse (and positive) experience in advance.

    I would suggest that a first step would be for all existing systems to document the rationales for their existence (is it for recruitment and retention? to provide retirement security? to get votes in elections? whatever it is, identify it and write it down). Then also document the outcomes that are uncertain along with the primary risks driving these uncertainties. At this point, don’t try to come up with changes to impact these risks, just get them identified. Then write policies based on the current design that documents the goals and processes for funding, investment, and benefit policies. Future councils/legislatures/boards can’t be bound by current ones typically, but putting down the principles under which they should operate makes it much less likely that a future body takes an action that is against these principles.

    This is a long way to say that I think that there will be a pendulum swinging back from the idea of DC-based systems, greater than just this NIRS report, but rather than just going back to basic DB systems and the false dichotomy of the world being DB versus DC, wouldn’t it be great if instead we as a society approached these systems with intentionality? Considering and documenting objectives and risks and then developing management policies based on those as a minimum and ideally building on that to design systems that are dynamic and largely self-correcting and aligning risks and rewards with those desired by the taxpayers.

    I can’t claim this is even really a dream, but I wish.

    Reply

    • Posted by Tough Love on August 19, 2019 at 8:47 pm

      Quoting …..

      “And also get rid of WEP ”

      Anyone calling for that (a) is likely impacted by that SS WEP provision (the Windfall Elimination Provision), or (b) doesn’t understand it’s VALID purpose.

      Why do you think that the SS administration Officially called it the “Windfall Elimination Provision”? Because it’s “purpose” is to ELIMINATE an unjustifiable WINDFALL.
      —————————————-

      Reply

  18. Posted by Anonymous on August 19, 2019 at 3:04 pm

    99 comments…

    What is the limit?

    I just got my computer back from the shop (new dedicated copy/paste button.)

    Also, someone has to go out and make sure the pool girl does a good job.

    Reply

    • Posted by Tough Love on August 19, 2019 at 5:07 pm

      The count would be a LOT lower if your comments were not so misleading.

      I occasionally wonder if PSDrone is correct when he says that you are likely Paid to do the Public Sector Union’s bidding online.

      Reply

  19. Posted by Anonymous on August 19, 2019 at 8:12 pm

    Hmmmm.

    How do you know he’s on multiple sites every day?

    Reply

    • Posted by Tough Love on August 19, 2019 at 8:38 pm

      “he”?

      Don’t you mean YOU….. who indeed IS Stephen Douglas (now posting under Anonymous).

      Reply

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