GE Freeze Warning

With a Defined Benefit plan that is over 100% funded why did General Electric (GE) announce that it was:

  1. Freezing the U.S. GE Pension Plan for approximately 20,000 employees with salaried benefits, and U.S. Supplementary Pension benefits for approximately 700 employees.
  2. Pre-funding approximately $4-5 billion of estimated minimum ERISA funding requirements for 2021 and 2022.
  3. Offering a limited time lump-sum payment option to ~100,000 eligible former employees who have not started their monthly U.S. GE Pension Plan payments?

Part of the answer is in the SB Actuarial Certification forms for the last 10 years which show:

 

Having made very little, if anything, in company contributions through 2016 GE decided to go all out in 2017 with a contribution that was supposed to fully fund the plan but the same problem persisted.

With 422,409 participants as of 12/31/18 the premium GE has to pay to the Pension Benefit Guaranty Corporation (PBGC) in the next week will likely be $262,315,989. Even a plan that is overfunded for valuation purposes is considered underfunded in the view of the PBGC which requires the use of much lower segment rates to determine the liabilities upon which the premiums they get are calculated. To cope with this tax GE adopted this three-pronged approach:

  1. Freeze benefits to lower liability values.
  2. Pre-fund to raise asset values.
  3. Offer lump-sum payment option to ~100,000 eligible former employees to lower the participant count.

GE sponsors the 15th largest private-sector defined benefit plan in terms of participants. Many others have followed this path paved by the PBGC and many more will.

From the latest 5500 filing:

Plan Name: GE Pension Plan
EIN/PN: 14-0689340/333
Total participants @ 12/31/18: 422,409 including:
Retirees: 242,357
Separated but entitled to benefits: 137,498
Still working: 42,554

Asset Value (Market) @ 1/1/18: $56,155,554,957
Value of liabilities using RPA estimated rate (5.72%) @ 1/1/18: $51,334,973,543 including:
Retirees: $31,415,054,011
Separated but entitled to benefits: $10,074,794,756
Still working: $9,845,124,776

Funded ratio: 109.39%
Unfunded Liabilities as of 1/1/18: N/A

Asset Value (Market) as of 12/31/18: $50,008,634,994
Contributions – Employer: $0
Contributions – Employee: $89,856,902
Payouts: $3,445,861,777
Expenses: $252,570,116

105 responses to this post.

  1. Posted by MJ on October 8, 2019 at 4:11 pm

    John, in looking at this model is it safe to say that no matter how much NJ puts into the pensions they will never be solvent or sustainable? Would this include all NJ public pensions or would the others such as police/fire be okay? Or is it anyone’s guess?

    Reply

    • Posted by NJ2AZ on October 8, 2019 at 4:20 pm

      making them sustainable at current benefit levels would require workers accepting much larger contribution rates and taxpayers accepting much higher taxes. Pensions are a relic of the anomalous gains in mortality and productivity of the 19th century.

      so in other words, no.

      Reply

    • Completely different issue. PBGC is killing off private sector plans with those draconian fees which is the upshot of this blog. They force plans to be 150% funded so as not to pay their very high, and rising, premiums.

      There is no PBGC in the public sector which is one reason NJ can run their plans into the ground. How much NJ puts into the plan matters very much. If the state can put in $10-$15 billion over the next 20 years they should get to being honestly 100% funded but right now the state has no incentive to do that.

      Reply

      • Posted by dg1717 on October 8, 2019 at 5:18 pm

        In reading this, what is better, PBGC plans that are overfunded (on the assumption of very high discount rates) or no hope of being funded like MEPPs. Without PBGC oversight these are funded to MEPP levels, no? PBGC premiums are bad, but without accountability companies would be looking to the government to help with their low funded plans next downturn.

        Reply

      • Posted by Rex the Wonder Dog! on October 8, 2019 at 5:21 pm

        How much NJ puts into the plan matters very much. If the state can put in $10-$15 billion over the next 20 years they should get to being honestly 100% funded but right now the state has no incentive to do that.
        Too little too late. This can kicking has been going on for decades. Not a year or two, decades. You posted the videos of those Ass Clown NJ politicians just a couple of days ago, claiming with a straight face, there is “no problem”. THAT right there IS the problem. Refusal to elect honest leaders who will deal with the issue. The problem is well known, well documented, going back 15-20 years minimum now, and STILL no one is willing to step up and face the hard music. Don’t feel bad, this is going on everywhere. Look at the national debt, America has been running budget deficits of as mush as 43% per year, going back 40 years. Ronnie Raygun started it back in 1980 (the massive TWIN deficits, trade and budget). Has ANY President, or Candidate, offered ANY plan to have an honest, deficit free budget since 1980??? Or PLAN to PAY OFF the $23 trillion national debt? Yes, ONE HONEST Candidate made a straight up plan. A very PAINFUL plan. Henry Ross Perot was going to slap a 50 cent/gallon gas tax to pay the national debt off. And he was LEADING the nation before he dropped out. Perot could have been elected President, on that ONE issue. The ONLY straight forward, straight shooting Candidate in the last 40 years. Trump was actually elected IMO because many of his positions, but not all, mirrored Perot. Trade deficits being the biggest. Simple math, not rocket science.
        🐶🐶🐶🦴🦴🦴

        Reply

      • Posted by stanley on October 10, 2019 at 1:54 am

        “They force plans to be 150% funded so as not to pay their very high, and rising, premiums.”

        The PBGC has a very difficult position. It is supposed to be privately funded with no support from the taxpayers. Financial values are at historically extreme levels and not reliable for any extended period of time. I’m not sure that it is the PBGC that is killing off private pension plans. I would say that it is fiat money, the government interventions in the economy, the welfare state programs, the boom bust nature of the modern economy. Let’s face it. When you take away honest money and market interest rates, you’re screwed.

        Yes, 150% funded requirement burden put on employers is a serious hardship, but from PBGC’s perspective probably necessary to keep the pension insurance program stable. The result will be the closing of private pensions. I expect Boeing to offer retirees a choice between a cash settlement and an annuity at any time. After they recover from the 737 debacle.

        Reply

  2. Posted by Rex the Wonder Dog! on October 8, 2019 at 5:07 pm

    GE, and the other 30 DJIA companies (GE only original company left in the DJIA), were the LARGEST pension plans in America up until the 1970’s. They were massively larger than the largest gov pensions, including CalTURDS. In fact I would bet EVERY single Fortune 50 company prior to the 1970’s, and prior to say 1975, 76, 77, were probably larger than CalTURDS and ALL other gov/muni pension plans. I would also bet that the average unskilled/semi-skilled employee made much more than the average gov/muni employee with the same skill in that time period. And the job security was much stronger back then, even in the private sector. The public LOOKED to the private sector to make the best money, in the best jobs, with the best job security. Now it is a complete 180. The private sector pays peanuts why the gov/muni sector pays unskilled/semi-skilled employees (cop, FF) in the top 1% in many jurisdictions. Shows how upside down America is now, and it has been on this downhill road (unless you’re a gov/muni employee) for the last 40 years for the unskilled/semi-skilled American. Sucks. Private sector employment is what drives America, it is the BACKBONE of our country…not gov employment. Now the limited few, the gov/muni employee, seks massive tax increases for ALL employees to fund their small, sliver section of the employment universe. TAX the masses, the private sector, at massive rates (in aggregate) to fund the lifestyles of the few, small, and rich public sector. Won’t last kids. When the next downturn comes, even a slight 6 month recession, it is going to be haircut time. IF a 2008 meltdown comes t will be LIGHTS OUT! CalTURDS will have to cut pensions by 50%. IL and Chicago by 80%-90%. NJ, probably 80%+++ too…. You heard it here FIRST kids, from the smartest K-9 on Planet Earth….

    🐶🐶🐶🦴🦴🦴

    Reply

    • Oh yeah. First? We’ve been hearing this like YOU stated for the past 15-20 years. Well, NJ PFRS members got smart. Not only have towns been funding the police pensions, we have managed to separate ourselves from the other pension funds (TPAF) that are much more likely to go belly up. Hence, the push to close the system to new members.

      Reply

      • Posted by Rex the Wonder Dog! on October 9, 2019 at 5:42 am

        Right! …… Keep telling yourself that EG! House of cards waiting for a small dust up of wind to blow that house of cards into oblivion … 🙂
        🐶🐶🐶🦴🦴🦴

        Reply

        • Only time will tell my friend. Only time will tell. The PFRS valuation report should be required reading for you.
          Neither one of us will budge from our positions. Soooo…..these opinion fueled arguments are getting ridiculous.

          Reply

          • Posted by NJ2AZ on October 9, 2019 at 12:11 pm

            Like we said in an earlier post: Anyone rooting for you to take a hit is a moron. It might happen, but i don’t see any scenario where you take a hit but the general public is doing fine.

            if you feel pain, its a situation where we are all feeling pain.

            “OH hey i’m glad El Guapo isn’t getting his full pension! My 401k is worth half of what it was, but totally worth it!” – no one with a brain

          • Posted by Anonymous on October 9, 2019 at 12:30 pm

            Exactly AZ. I hope you prosper beyond your wildest dreams. They wish me harm even though it would mean they take a huge hit as well. Go figure….

            Id like to say that getting Darnold back will help…I don’t think it will.

          • Posted by NJ2AZ on October 9, 2019 at 12:51 pm

            the problem with the jets (other than the fact they just aren’t that good) is their schedule this season was so front loaded that it will probably make their season worse than it might have been.

            not that i think they are secretly good, but starting 0-6 or 0-7 really deflates a team. why even bother trying in your winnable games…at that point may as well go in tank mode.

            I don’t think they ever had a shot to win more than 6 games this year anyways, but now it might only be 3 since their season will already be over before October ends.

          • Posted by stanley on October 10, 2019 at 8:24 am

            “Like we said in an earlier post: Anyone rooting for you to take a hit is a moron.”

            Anyone wasting time wishing for any outcome at all is a moron–let’s just say that he isn’t well thought out. Either as individuals or as a collective our hopes won’t change reality.

            I don;’t believe that the Constable will collect half of his promised pension in real terms, but I’m losing no sleep over the issue.

          • Posted by Tough Love on October 10, 2019 at 9:06 am

            Less with the COLA frozen…… that’s a 1/4 to 1/3 drop in value just by itself.

          • AZ…. see what I mean? They don’t realize that if I go in the crapper(don’t forget I max out 457/Roth/15 ur mortgage done in a few years—so not fiscally irresponsible by any measure), if I go in the crapper—-they most likely will be there as well and have gotten in there sooner. Dumb.

          • Posted by Tough Love on October 10, 2019 at 10:35 am

            Reducing the now ludicrously excessive pensions and benefits granted Public Sector workers CAN and SHOULD be done …….. and doing so is eminently justifiable, irrespective of the status of the US or Global economies.

          • Posted by stanley on October 10, 2019 at 12:13 pm

            “…so not fiscally irresponsible by any measure), if I go in the crapper—-they most likely will be there as well and have gotten in there sooner. Dumb.”

            You don’t know! You’re not clairvoyant. You don’t know how others are organized and how they are positioned. We have a clobbering coming to us but it won’t be distributed equally. I highly doubt that anyone is hoping for a financial storm.

          • Posted by stanley on October 10, 2019 at 1:16 pm

            Anyone, please share an opinion. How does this work out. Will the privately employed stand by and watch their pensions disappear while the government sector continues to clean up and roll in the big pension bucks?

            How does this not become a major campaign issue? Martin Hutchinson wrote recently comparing the situation in the U.S. to 17th century France where the nobility and clergy hogged all of the wealth leaving very little for the people. The situation finally ended with the Committee for Public Safety and mass use of the guillotine killing the nobility and clergy and confiscating church property

          • Wow. Lol. That’s a huge stretch my man. Eventually, perhaps you will see public pensions stopped. It may happen very soon to all new and young public employees in NJ except for police and fire. But what you more than likely will NOT see, is the past accruals for work already performed be cut. Even TL would, if she was honest with herself, not expect to see that day. And EG and Marine 1 will be loooonnngg retired if and when that ever happens.
            But cmon, to compare us to nobility is a little much my friend. Last I looked I lived among the commoners.

          • Posted by Anonymous on October 11, 2019 at 1:32 pm

            Stanley…

            “Anyone, please share an opinion. How does this work out. Will the privately employed stand by and watch their pensions disappear while the government sector continues to clean up and roll in the big pension bucks?”

            A surprising number and variety of pundits have said something like, “it wouldn’t be fair to cut pensions for those already retired” (Schwarzenegger) or even for past accruals of current employees (TL, if I understood correctly). I disagree. There have already been cases of employees retiring early to lock in their pension ahead of anticipated cuts. Jane the Actuary suggests this is futile because… math. When the money runs out, it’s over. For everyone.
            I say, there is no reason my pension is more sancrosanct because I retired last year, than someone who retires next year. There should be some forethought to fairly distribute the sacrifice. (The same thing may come soon for Social Security.)

            “…Will the privately employed stand by and watch their pensions disappear while the government sector continues to clean up and roll in the big pension bucks?”

            Hell no! There is too much propaganda already. With 20/20 hindsight, public pensions should have been very different. I will agree with Ed Ring on this concept.
            “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.”

            Which might entail, for some workers, increasing current wages to compensate for lower pensions. And then fund them properly, with more conservative assumptions on returns.

        • Posted by stanley on October 10, 2019 at 5:35 pm

          “Wow. Lol. That’s a huge stretch my man. Eventually, perhaps you will see public pensions stopped.”

          You may be correct, but I’m wondering if your opinion is realistic. If you are correct, I believe that substantial generational conflict will be the result. Don’t check into a hospital or extended care facility or do so only at your own risk. When there is such a variance between economic results ( you get a huge pension, many others don’t receive any pension) you can expect great anger and hostility and probably a measure of violence here and there.

          It may turn out that inflation brings your pension to within reasonable limits.

          Reply

  3. Posted by geo8rge on October 9, 2019 at 7:57 am

    Alexandria Ocasio-Cortez says it the best I have ever heard it expressed, tweet of the year IMO:

    Previous gens have used millennials like a credit card: leaving nonstop war, an eroding planet, and education profiteering to fix ourselves.

    Now it’s on us. The same officials who got us into this mess aren’t going to get us out.

    It’s time to elect a new generation to office.

    But AOC explains:

    Trump’s sudden withdrawal from northern Syria & endorsement of Turkey’s actions could have catastrophic consequences & risks laying the ground for immense violence and suffering.

    We can pursue a strategy to stop our endless wars without endangering the lives of innocent people.

    Alexandria Ocasio-Cortez Learns to Love War: Blasts Trump’s Syria Withdrawal
    https://www.breitbart.com/national-security/2019/10/08/alexandria-ocasio-cortez-learns-to-love-war-blasts-trumps-syria-withdrawal/

    Reply

    • Posted by PS Drone on October 9, 2019 at 4:10 pm

      This post has a lot to do with underfunded and outrageous NJ public sector pensions.

      Reply

    • Posted by Anonymous on October 9, 2019 at 6:36 pm

      “Previous gens have used millennials like a credit card: leaving nonstop war, an eroding planet, and education profiteering to fix ourselves.

      Now it’s on us. The same officials who got us into this mess aren’t going to get us out.”

      And pensions.

      Reply

    • Posted by Anonymous on October 9, 2019 at 6:38 pm

      Specifically, “underfunded and outrageous NJ public sector pensions.”

      Reply

      • Posted by Tough Love on October 9, 2019 at 6:53 pm

        Yes, NJ public sector pensions ARE outrageous, and outrageous pensions do NOT deserve being fully funded with Taxpayer dollars.

        Reply

      • Posted by Anonymous on October 10, 2019 at 9:44 am

        According to Biggs, replacement rates (pensions plus SS) for New Jersey state workers (81%) is below the national average (87%.)

        This is for full-career workers retiring in 2011-2012.

        ” Another way to think about the value of public pension
        benefits is to consider total benefits paid out over an
        employee’s retirement. From this point of view, many state
        retirement systems produce what might be called “pen-
        sion millionaires”—that is, employees who will receive
        more than $1 million in lifetime retirement benefits.”

        New Jersey is not one of those many states.

        Nationwide average… $768,940.
        New Jersey… $854,201

        ( These figures assume that the average full-
        career employee retires at age 60 and survives until age
        84.8 The pension plan is assumed to pay an annual cost-
        of-living adjustment (COLA) of 2.0 percent. Present values are calculated assuming an interest rate of 3.5 percent,
        based on current yields on long-term Treasury securities.)
        Biggs

        “Outrageous” is in the eye of the beholder.

        Reply

        • Posted by Tough Love on October 10, 2019 at 10:41 am

          Quoting Stephen Douglas………………….

          “According to Biggs, replacement rates (pensions plus SS) for New Jersey state workers (81%) is below the national average (87%.)”

          See, there you going again ………. comparing one excessive PUBLIC Sector pension Plan to other (also excessive) PUBLIC Sector pension Plans.

          I’m quite sure that the retirement income replacement ratios for PRIVATE Sector workers are MUCH MUCH lower than those you noted above. THOSE are the replacement ratios to which the PUBLIC Sector should be compared, because PRIVATE Sector workers are responsible for funding the vast majority of PUBLIC Sector pensions.
          ————————————

          You’re always trying to hoodwink the readers.

          Reply

        • Posted by Anonymous on October 10, 2019 at 11:47 am

          Stop me if you’ve heard this before… “It is not valid to compare pensions outside the context of total compensation.”

          If the average public sector worker earns twelve percent less than an equivalent private sector worker (Biggs, nationwide, 2012), and contributes ten percent of that toward his own pension, he could easily receive a higher percentage (of those smaller wages) as a pension and still earn total compensation lower than, or equal to a comparable private sector worker.

          We verified this several years ago when you insisted that private sector contractors building New Jersey roads earned less than State road maintenance workers. They don’t. And that private sector contractors definitely do not have Defined Benefit pensions. They do.

          There are still, today, in New Jersey, many public workers earning lower compensation (or equal) than the private sector. And it is not just a handful of PhD s

          Reply

          • Posted by Tough Love on October 10, 2019 at 12:02 pm

            Quoting Stephen Douglas …………..

            “Stop me if you’ve heard this before… “It is not valid to compare pensions outside the context of total compensation.””

            Yes Stephen, you’ve stated that perhaps hundreds of times …….. and I agree, noting that per Dr. Biggs AEI compensation study in BOTH our home states of CA and NJ, on a TOTAL COMPENSATION BASIS the Public Sector workers in each state have (taken as ONE group ……. which IS what financially impacts the Taxpayers) a 23%-of-pay TOTAL COMPENSATION ADVANTAGE over their Private Sector counterparts.

            Yup that’s a 23%-of-pay TOTAL COMPENSATION ADVANTAGE (and that INCLUDES ….i.e., is AFTER factoring in ….. the fact that cash wages are somewhat lower).

            By hey, that never stops you from peddling your distortions, distractions, omissions of fact, and lies.
            ——————————————-

            And yes we DID notice the diversion …………. by virtue of responding with this nonsense AGAIN, INSTEAD of responding to my reply to your earlier comment just above (your comparing one excessive PUBLIC Sector pension to other also excessive PUBLIC Sector pensions INSTEAD of to the retirement security of PRIVATE Sector workers who pay for Public Sector pensions.

          • Posted by Anonymous on October 10, 2019 at 7:48 pm

            Meh, perhaps dozens of times, certainly not hundreds. About as many times as we’ve read this…

            “TOTAL COMPENSATION BASIS the Public Sector workers in each state have (taken as ONE group ……. which IS what financially impacts the Taxpayers) a 23%-of-pay TOTAL COMPENSATION ADVANTAGE over their Private Sector counterparts.”

            GIGO.

            Even if the data were correct, then or now, it is very impressive that you can add one set of numbers, then divide by the total of another set, and come up with an average. That’s math, whether done by hand or by computer. But knowing what to do with the numbers is key. In this case it may roughly tell the comparative generosity between states, but not the difference in generosity within each state.

            “comparing one (average) excessive PUBLIC Sector pension to other also (average) excessive PUBLIC Sector pensions…”

            If you say so… again. To which I reply; to begin to solve the problem in one state, compare those workers who actually have compensation higher than private sector workers to those which have compensation equal to, or less than, the equivalent workers. Those last two cohorts do not have excessive pensions. They are not greedy, they are not moochers. Their unions are not a cancer upon society. They are guilty of neither bribery nor collision. Many unions are simply playing defense, and poorly, at that.

            The wage compression is a phenomenon that has evolved in every state, and most OECD countries, much like early retirement for military and safety workers. You are not being honest with yourself. Nor are you being honest with us.

            You are not a stable genius. You do not have a great and unmatched wisdom. What you call knowledge and experience, I call hubris. AKA… bulls hit.

            Diversion my arse.

          • Posted by Tough Love on October 10, 2019 at 9:28 pm

            Sorry Stephen, but snide remarks like GIGO does not blow off a correct analysis.

            From a FINANCIAL IMPACT standpoint …. which is what Taxpayers are concerned with ………. how much Public Sector Total Compensation exceeds or is less than that of comparable Private Sector workers SPLIT BY INCOME SEGMENT does not matter. The total (i.e. the net difference) from ALL segments combined is what financially matters

            And no matter how many time you point out (correctly) that SOME Public Sector workers make less in total compensation than that of their Private Sector counterparts, it’ DOESN’T matter when Taxpayers are interested in the NET OVERALL financial impact on them.
            —————————————————————————
            Wash , rinse, repeat…………. I DO expect you bring this nonsense up again (and again, and again) in short order.

          • Posted by Anonymous on October 10, 2019 at 11:09 pm

            “And no matter how many time you point out (correctly) that SOME Public Sector workers make less in total compensation than that of their Private Sector counterparts, it’ DOESN’T matter when Taxpayers are interested in the NET OVERALL financial impact on them.”

            I pointed out correctly, according to Biggs, Munnell, and others, many public sector workers make less in total compensation than that of their Private Sector counterparts,

            And,

            That many more public sector workers make roughly equal total compensation. Why do you never acknowledge those? They are not overpaid. They are not over-pensioned. They are not greedy, bribing, moochers. And they are are more than “a few”.

            The taxpayers damn well should care. As your president says “most people don’t know” about this compression. Survey your taxpayers again. Say hypothetically that roughly one third of public workers are overpaid, one third are underpaid, and one third are “just right”. Where would you make the cuts? Make the cuts in the correct place, and the “NET OVERALL financial impact on them” will be reduced, without decreasing the ability to attract and retain those who are under, or equally paid. Win/win.

            This should be a no-brainer for you. You have constantly and adamantly claimed there is no reason to overpay those with a high school education. If they can’t cut it on the lower pay, they can rely on social services, just like the private sector. So cut their compensation (benefits; you can’t cut wages that much without violating minimum wage laws.) Depending on the state, you may need to cut benefits progressively up to a third or half of workers. As we discussed before, we probably should take a portion of that savings to increase the wages of those underpaid at the top. An ideal solution. Not only is each group equally paid, but the net overall financial impact is equalized. What’s wrong with that?

            “Wash , rinse, repeat” Bet on it. You’ve already agreed to it several times in the past. It’s logical.

            1) The average public worker earns more in total compensation than the equivalent private worker.

            2) Reduce the compensation of only the overpaid state workers to that of equivalent private workers.

            3) There is no step three. The net overall advantage is gone. No one is overpaid.

          • Posted by Tough Love on October 10, 2019 at 11:37 pm

            Quoting ………..

            “That many more public sector workers make roughly equal total compensation. Why do you never acknowledge those?”

            I DID acknowledge that there are Public Sector workers make less in total compensation than their Private Sector counterparts ………… but to REPEAT…….. what financially impacts the Taxpayers the the NET of the greater and lesser total compensation amounts FROM ALL WORKERS TAKEN TOGETHER (differences by income-level-specific splits NOT being financially meaningful) ….. and when that is totaled in BOTH of our home Sates of CA and NJ, there is a 23%-of-pay PUBLIC Sector Total Compensation ADVANTAGE, rising to 33% when the value of the MUCH greater PUBLIC Sector job security is factored in (also per Dr. Biggs AEI Compensation Study).

            And …….. Dr. Biggs Study excluded PUBLIC Sector Safety workers (Police, Firemen, etc.) who have MUCH greater than average wages and the richest pensions and benefits. Hence, had they NOT been excluded, that 23% (33% with job security advantages included) would have assuredly been materially GREATER.

            Taxpayers ……………. how much MORE would YOU have for YOUR retirement need if YOU had and ADDITIONAL 23% (or 33% of MORE) in wages in every year to save and invest until retirement ….. $500,000, $1 Million, perhaps $2 Million for some ?

            Well, those figures are good estimates of the amount by which Taxpayers are ON-AVERAGE overcompensating every Full-Career NJ and CA Public Sector worker, mainly via their ludicrously excessive pension & benefits.

            ——————————————

            P.S. I’ll leave it to our self-interested Politicians/Public-Sector-Unions to fight it out over WHICH groups (and which element of compensation) should be cut ………. as long as that 23% (or 33% or MORE) Public Sector total compensation ADVANTAGE is eliminated.

            The decades-long financial rape of the Taxpayers needs to END.

          • Posted by Anonymous on October 11, 2019 at 3:30 am

            ” FROM ALL WORKERS TAKEN TOGETHER ”
            Fine. According to Biggs, nationwide, state employees are 12 percent underpaid in wages. Benefits brings that to a ten percent advantage. Those with a Bachelor’s degree or higher earn either equal to or less than the private sector (+/- 5%).
            (Table 4, p 60)

            This is 60% of state workers.
            (Table 1, p 58)

            Lower the compensation of the “some college” or lower group to be equal to the equivalent private sector workers in those groups. You insisted on this anyway, countless times. “GOT A PROBLEM WITH EQUAL? ” Let them fall back on Social Services, just like the private sector. There is no valid reason to pay these workers more than the private sector. Period.

            This move alone will automatically reduce the average ” FROM ALL WORKERS TAKEN TOGETHER “. It’s math. It’s a tautology. Whether the difference is ten percent for the nation as a whole, or 23 percent for New Jersey. If no worker from the state is above average, then “all workers taken together” can not be above average. It’s impossible.

            Both problems are solved. For the taxpayer’s, the average of all state workers taken together is less than that for all private workers. For TL, the lower paid state workers earn the same as their peers in the private sector (plus welfare and Medicaid)

            Is this not true?

            The decades-long financial rape of the Taxpayers is ENDED.

          • Posted by Tough Love on October 11, 2019 at 11:08 pm

            Stephen, I’m growing weary of responding to your distortions, omissions of pertinent facts, and lies …… so I’ll simply refer readers to the source, the referenced AEI Study authored by Dr. Biggs.

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

            There are VERY informative Graphs comparing the PUBLIC/PRIVATE Sector for Wages (Figure 1), active workers healthcare premiums (Figure 2), Retirement security contributions such as Pensions & SS (Figure 3), Value of accruing Retiree healthcare benefits (Figure 4), and Fringe Benefit (Figure 5).

            The first, “wages” shows the Public Sector DISADVANTAGE (the Stephen noted), while the other four show a very material Public Sector ADVANTAGE.

            The net impact of all of those (Figures 1 through 5) are summarized in Figure 6 which shows PUBLIC/PRIVATE Sector Total Compensation differentials by state. Eight of the 50 States show a Public Sector DISADVANTAGE ranging from -1% (of pay) to -6%. The other 42 States show a Public Sector Total Compensation ADVANTAGE ranging from 1% to 42%, likely averaging on the under side of 15% with the State-specific %s weighted by state population.

            THIS (Figure 6) is where the 23% Public Sector Total Compensation ADVANTAGE in both NJ and CA (that has been mentioned numerous times on Mr. Bury’s Blog) comes from.

            ————————

            Readers ………….. judge for yourself.

  4. Posted by Tough Love on October 9, 2019 at 9:52 pm

    From Truth In Accounting ………..

    https://nj1015.com/njs-economy-in-danger-maybe-for-years-to-come-analysis/

    Quoting from the article:

    “The biggest drain on New Jersey fiscal health continues to be the cost of pension and health benefits for public workers.”

    Gee ……….. now THAT’S a surprise.
    ——————————————
    Another quote:

    “So far, Gov. Phil Murphy has been reluctant to tackle those issues in an substantive way, lest he anger the public employee unions ………….”

    Again…………. no surprise there.

    Reply

  5. Posted by Tough Love on October 10, 2019 at 11:54 pm

    WOW, Public Officials with integrity …………. top bad there are so few.

    https://kywnewsradio.radio.com/articles/news/city-councils-3-retiring-members-declined-drop-program

    Reply

    • Posted by Rex the Wonder Dog! on October 11, 2019 at 12:56 am

      Mo^%$#Fu*&^%!
      DROP is the biggest FRAUD of all-time.
      “It was never intended for elected officials and it was wrong (for them to take it),” said Hayllar…Nonetheless, take it they did. In fact, several former officials figured out a loophole that allowed them to join the program between elections and, if re-elected, retire for a day, collect their lump sum payment, and return to office…That was blamed, in part, for the ballooning cost of the program. It was intended to be revenue neutral, but the Pennsylvania Intergovernmental Cooperation Agency (PICA) estimates it cost the city $237 million from 1999 to 2015.
      Major Fraud.

      Reply

  6. Stanley, I agree with you in that when the fall comes and it inevitably will, it is preposterous to think that some, both private and public, won’t take the hit harder than others. You are correct, no one knows how each individual is positioned and my guess would be that some are better off than others. Those paying very close attention will fare much better than those overly confident that the current situation will go on forever.

    If Warren gets elected she is all for more government, less corporations, more labor unions, more freebies, etc. and let’s face it we are one election away from these nut jobs IMO taking over.

    BTW I am friends with lots of teachers, state workers, etc and they all know (esp the younger ones) they are screwed and will never see their pensions and will have to keep paying more into health benefits. They keep voting for the Ds in NJ in the hopes that the charade will continue…you know less cuts in school funding, less cuts in social programs so that they can keep their jobs. After, all where would they find jobs in the private market with the skills, salaries and benefits they have as public workers. I do believe that people are starting to wake up and that’s why somebody like DT got elected. The left can spin it any way they want, people are waking up and the only sad part is that DT is the best option we have!

    Many many people especially in south jersey have woken up and have realized that some keep taking more and more while others are expected to take less and less.

    I guess time will tell and all we can do is position ourselves to be able to take the worst hit ever and still come out okay. I don’t lose any sleep over the pensions and I do not wish hard times on anyone. We are all in it together whether we like it or not.

    Reply

  7. Posted by Anonymous on October 11, 2019 at 2:45 pm

    “Stanley, I agree with you in that when the fall comes and it inevitably will, it is preposterous to think that some, both private and public, won’t take the hit harder than others.”

    I agree. I am very agreeable today. If/when public pensions have no choice but to be cut, they should be cut equitably. Am I prepared for it? Do I have a choice?

    Stanley,
    “Will the privately employed stand by and watch their pensions disappear while the government sector continues to clean up and roll in the big pension bucks?”

    Most privately employed never had a pension to begin with. Even before the big 401(k) growth in the nineties. Retirement is really a fairly new phenomenon anyway. When I grew up in the Midwest, Social Security was the only game in town. For the lowest quintile of earners, it still is. As Andrew Biggs says, most people are more prepared for retirement than we think. Some people have wisely set aside funds for retirement… Good for them. For the bottom twenty percent, “saving for retirement” is next to impossible, and probably not even logical. You’re not unprepared, you are poor. Always have been, always will be. You’ve got this! You’re experienced. You know how to do this!
    That’s the way Dad retired. Social Security and nine kids help out, financially and otherwise. I have three sisters (maybe four, not sure) now on SS only. All three have kids to help.

    I happen to have a comfortable pension. I won’t be surprised if it gets cut sometime in the future. We have two daughters and five grown grandkids to help out, but I have a premonition that when the next big one comes, we may be helping them out more than they help us.

    Financially, anyway. The least they could do is wheel me out to get some sun in the afternoon.

    Reply

    • Agreed. But not everyone has children or even worse some have children who don’t give a rats ass about them. Sometimes this is a direct result of how they were raised.

      Some on here still think everything will collapse and others think that police officers will work for peanuts. Won’t happen. In reality, if the cops ever stood down…most on here except for Marine1 would be at the criminal element mercy. I would be able to survive with my training and my firearms. Would TL? I doubt it highly. If the economy ever collapsed to the point they speak of, you could melt all you worthless gold. Lead will be the precious metal of the day and it wouldn’t be pretty. The only ones looking for a reset are the have nots. Many of whom have a terrible work ethic as it is. The leaders of all these loony militia groups and social justice groups are all unemployed losers with a capital L. Both sides. Without the cops literally there as a deterrent for assholes doing whatever they hell they wanted with no consequences, the country would be a dramatically different place. Most important job of the government is to PROTECT its people for those who would hurt them. If I wasn’t a cop, all I would care about was protecting my family. I would kill 1,000 people and sleep like a rock if they were trying to harm ONE damn hair on my wife or kids heads. Any real man would.

      Reply

      • Posted by Tough Love on October 11, 2019 at 11:14 pm

        1000 deaths for harming 1 hair?

        Hopefully you were exaggerating.

        Reply

        • An exaggeration? Yes. Of course. It is an expression. If they were in actual harms way though it wouldn’t even be a question. lol.
          But back to the value of the police, look no further to the cops in MN that had to put up with the nonsense from the supposed tolerant left. TL and Rex, you love to post negative things and funny pics of cops, do you agree with liberal protesters in MN who were attacking the police and their horses? Disgusting behavior that will turn more people to Trump, no matter how bad he is. This behavior is excused or never mentioned by dem leaders. I don’t know why…we are certainly NOT the enemy of dem politicians.
          And will Beto please STFU already. Bad enough thinking he is going to seize weapons. He isn’t. No chance. But now he wants to punish religious groups that don’t meet his ideological litmus test.
          Full disclosure: I am pro gay marriage and I feel that NO religious group should get any tax exemption. It is abused. However, it is not the government’s role to pick and choose which religion they find offensive. He would be worse than Trump ever could be. Blatant 1A violation. Doesn’t think before his knee jerk reaction to lander to the left.

          Reply

      • Posted by Anonymous on October 11, 2019 at 11:47 pm

        “Churchill: “Madam, would you sleep with me for five million pounds?” Socialite: “My goodness, Mr. Churchill… Well, I suppose… we would have to discuss terms, of course… ”
        Churchill: “Would you sleep with me for five pounds?”
        Socialite: “Mr. Churchill, what kind of woman do you think I am?!” Churchill: “Madam, we’ve already established that. Now we are haggling about the price”

        One hair? A thousand hairs?
        One life or a thousand?

        It’s the principle.

        Or an opinion, like $150,000 for an LEO.

        And who gets to decide, elected representatives, or anonymous commenters?

        Reply

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

          Yes, but where you stated “elected representatives”, you more completely should have stated ………….. “Union BRIBE soliciting and accepting self-interested, taxpayer-betraying, Elected Representatives”

          Reply

          • Posted by Anonymous by any other name is still... anonymous on October 12, 2019 at 12:38 am

            Again, opinion.

            Biased opinion.

          • Posted by Tough Love on October 12, 2019 at 12:58 am

            Anyone who doesn’t understand than Public Sector Union campaign contributions to Elected Officials (who determine their pay, pensions, and benefits) are just disguised BRIBES, is an idiot ………… or like you, a charlatan and Union-supporting mouthpiece.

          • Posted by Anonymous on October 12, 2019 at 4:55 am

            So sayeth the anonymous commenter.

      • Posted by Anonymous by any other name is still... anonymous on October 11, 2019 at 11:51 pm

        Or maybe YOU were exaggerating.

        Reply

  8. Posted by Anonymous on October 12, 2019 at 2:12 pm

    Are we still on topic? Are we maybe being too hard on ourselves?

    It appears that even the better regulated private sector plans (eg. GE) are in deep shite. As well as public and private plans in most other countries. Even the most conservative; Holland, I believe.

    Yeah, with 20/20 hindsight we made a lot of mistakes, but was/is failure almost inevitable? And what do we do about it, except blame the other guy…

    “The financial sustainability of the pension funds has been severely undercut by low
    interest rates in the wake of the global financial crisis. At an aggregate level, funding ratios, i.e. the total market value of the funds’ assets as a share of their pension commitments, have deteriorated from about 150 percent prior to the crisis to about 102 percent in 2017. While initially attributable to a sharp drop in investment returns over the years 2008–2010, these developments have been mostly triggered by a protracted increase in accrued liabilities associated with very low discount rates since then. In July 2015, to adjust for this new financial environment, the central bank acting as the pension and insurance sector supervisor changed its calculation method of the “ultimate forward rate” (UFR), the evolving long-term reference rate anchoring the yield curve used to discount actuarial liabilities for maturities beyond the “last liquid point” for which market rates are not available.”

    Now I can’t find the source of that quote, but it seems to be fairly common knowledge, maybe too little to late. Market loss, low interest, longer lifespan, and maturing systems… what else is there, that is pretty much beyond our control?

    So what next? As I recall, Jane the Actuary said she wasn’t interested in assigning blame, whereas Mary Pat Campbell said we have to find the blame to know what to fix. Any concrete ideas, or even brainstorming, for equitable, sustainable reforms?

    Blaming the whole thing on E and his cancerous union won’t work. Even if we cut his pension by 50 percent (TL) and his salary by 90 percent (Wonder Dog ged nonsense), and mortgaged his house, that won’t even be enough to bail out NJ pensions, let alone those of the whole free world.

    Maybe throw in my pension with E’s. I would do it in a heartbeat, if it would work. My sister said I could buy her house and 17 acres for $30,000, and I could survive on SS. (The house is a hundred years old, at least. And in Illinois.)

    Or, instead of useless ranting about public workers in general, or E in particular, may be consider actual reform. Which, yes, may include pension reduction. For some workers.

    Reply

    • Posted by Tough Love on October 12, 2019 at 8:11 pm

      Source of your quote ………..

      https://books.google.com/books?id=GiiGDwAAQBAJ&pg=PA8&lpg=PA8&dq=%22The+financial+sustainability+of+the+pension+funds+has+been+severely+undercut+by+low+interest+rates+in+the+wake+of+the+global+financial+crisis.%22&source=bl&ots=_781jVjTA3&sig=ACfU3U3ORTPFbUOccBvV5EfJrBn30TKetg&hl=en&sa=X&ved=2ahUKEwiZn76A0pflAhWqmOAKHZeWB0UQ6AEwAHoECAAQAQ#v=onepage&q=%22The%20financial%20sustainability%20of%20the%20pension%20funds%20has%20been%20severely%20undercut%20by%20low%20interest%20rates%20in%20the%20wake%20of%20the%20global%20financial%20crisis.%22&f=false
      ——————————-

      And my “opinion”……….

      While it won’t directly address current underfunding for PAST service accruals, we MUST either freeze or materially reduce FUTURE service pension accruals for ALL current Public Sector workers …………. just to STOP digging the deep financial hole we are now in DEEPER every day. And it’s woefully inadequate to ONLY do so for new and unvested workers.

      Reply

    • Posted by Anonymous on October 13, 2019 at 12:41 am

      “And it’s woefully inadequate to ONLY do so for new and unvested workers.”

      I agree, totally. Inadequate and inequitable.

      “…we MUST either freeze or materially reduce FUTURE service pension accruals for ALL current Public Sector workers ………….”

      I disagree, totally. Except in the worst cases where necessary to prevent system failure, cut only (or first) those pensions that are demonstrably above market level. Unless it is absolutely necessary, it is illogical to reduce pensions for those who are already under, or equally compensated.

      Reply

      • Posted by Tough Love on October 13, 2019 at 1:24 am

        I prefer and STRONGLY recommend that we freeze or VERY materially reduce Future service pension accruals for ALL current workers ..

        THEN ……… for what I would guesstimate to be a rather smallish group once equalized (with Private Sector workers) for hours actually worked and productive output where measurable …. increase the “wages” for Public Sector workers with lower total compensation (with a reduction in that increase to offset the increase in remaining DB pensions generated from that wage increase).

        Reply

      • Posted by Anonymous on October 13, 2019 at 3:55 am

        A pipe dream. There is not enough data or computing power in the world, and you will never get a consensus on “equal” wages or productivity or hours worked. EQUAL is a moving target.

        Whether you like it or not, lower educated public employees will be better compensated rather than be made dependent on social services. And hundreds of thousands of “public” workers will become private workers, and vice versa, because many jobs are already roughly equal, depending on whether the worker values current pay vs. deferred pay and other working conditions.

        There is no such thing as a public worker.

        And El guapo will be making $156k a year.

        Reply

        • Posted by Tough Love on October 13, 2019 at 11:07 am

          Never said it was EASY, but highly paid Private Sector workers OFTEN work 50-60 hrs/week WITHOUT ANY (regular or overtime) extra pay….. I certainly have and do. They do so because everyone else does so and they want to KEEP that job.

          If a Public Sector worker in a similar job works 40/hrs wk, they SHOULD BE compensated proportionately less.

          Reply

          • Cmon already. It doesn’t work that way. It is ALL about supply and demand. You know that. All these comparisons are useless. Earth is right. It would take a LOT of work and many consensus of different opinions to determine that number to pay folks. And that number would be more than likely CHANGED due to supply and demand. If you took the pension away….lots of people would skip into and out of public sector jobs based on any number of factors. Salary, location, satisfaction, etc. lots of those things take a back seat to a pension. Teaching and public works jobs will mirror private sector jobs where folks will move into and out of them based on where they are in life. And that’s fine. If it doesn’t work we will adjust again I guess.
            And yes if I work over 40 hours a week I get paid overtime. Many private sector jobs do and many don’t. Some folks jobs don’t have any overtime at all. One size doesn’t fit all.
            It’s rather rare these day to talk to 60 something private sector workers who have been in the same job for 40 years. Folks have many employers throughout their lives. Some of them do of course, but they are the exception. 50 years ago they were the norm. The same thing will happen when pensions are removed from the teaching and public works jobs. If enough folks leave, and it becomes a revolving door, they may have to reinstate things like longevity bonuses based on years of service. 🤷‍♀️
            Anybody’s guess.
            But this idea that a teacher who wants to leave the education field after 5-10 years, can’t reinvent herself as a dental hygienist, marketing employee or just about anything else is silly. The guy cutting the grass for the town can leave and start a landscape business, snow removal business, mechanic. Most of the guys stay for the pension. It’s not the pay. A competitive salary would be a must. For me, yes it’s the pay and pension and benefits of course. I’m not doing this because I’m a born law enforcer and that’s all I can do. The working conditions wouldn’t justify working for less than I need to support a family.

          • Posted by Tough Love on October 13, 2019 at 2:41 pm

            Quoting ………….

            ” lots of those things take a back seat to a pension.”

            INDEED, like ………… incompetence, laziness, burnout ……….. all to “hang in there” for the pension/benefits. Who doesn’t know at least a few people doing that … that SHOULD BE terminated.?

            Such workers SHOULD BE pushed out (who wants such teachers, police, etc.) to do something they would enjoy and are more suited for. Tenure provisions and Legislative/Regulatory/Union protections for Public Sector workers are FAR more DETRIMENTAL to Society than BENEFICIAL.

        • Posted by Anonymous on October 13, 2019 at 12:53 pm

          Still not the point. I am asking about real sustainable adequate retirement security for either the public or private sector. As with the Dutch: 12-18 percent contributions with 70 percent income replacement on retirement. Is it possible with a DB pension in today’s world?

          We are discussing pensions. Whether for MEPs, single private companies, or public. Can you still contribute 15-20 percent of wages and reliably withdraw 70 percent of FAS for your life?

          If you can, we can equalize public salaries later. It’s a separate problem.

          Reply

          • Posted by Tough Love on October 13, 2019 at 2:48 pm

            Quoting ……………

            “Can you still contribute 15-20 percent of wages and reliably withdraw 70 percent of FAS for your life?”

            Depends on how many years you work/contribute, and at what age you retire (hence identifying your life expectancy).

            One thing is for sure …. Exhibit “A” being Police pensions ……… it sure CANNOT be done when you work for 25 years and retire in your early 50’s. ……….. which is why TRUTHFUL estimates of Police pensions will show that the total NORMAL COST is usually a level annual 40% to 60% of pay…….. with CA’s COLA-increased 90% of FAS after 30 years being at the 60% top end.

  9. Posted by Anonymous on October 12, 2019 at 11:12 pm

    “There are only three ways for a pension plan to meet its pension obligations. 1) Generate investment returns, 2) increase contributions, or 3) amend the benefit structure / risk sharing. Recognizing the true level of pension underfunding and risks is critical in deciding how to share the burden between these three avenues.”

    The quote is from… https://www.marketwatch.com/story/low-interest-rates-are-compounding-the-big-problems-facing-pension-funds-2019-08-30

    But the concept is generic.

    To amend the benefit structure (3) it is critical to consider how the amendments (AKA reductions) will be equitably distributed among the workers/retirees, while still meeting the goals of attracting and retaining a qualified workforce and meet the other pension goals.

    We know that even with pensions, many workers are compensated at or below market level. It’s logical to first reduce pensions of those who are now above market level.

    Reply

    • Posted by Tough Love on October 12, 2019 at 11:52 pm

      Quoting Stephen Douglas ………………

      “…. and meet the other pension goals.”

      The pension “goals” of Public Sector worker/Unions are too great, too expensive, and unaffordable.

      They need to be “set” at the level that can be supported (under CONSERVATIVE assumption) by Taxpayer contributions no greater than those typically granted comparable PRIVATE Sector workers by their employers ………… most often, about 3% of pay into a 401K Plan.

      Reply

    • Posted by Anonymous on October 13, 2019 at 2:57 am

      Illogical.

      You’re still hung up on the handsome one. Do it your way. Freeze his DB pension going forward and give him and his whole department a 3 percent DC match. Now we’re equal?

      What about the roughly half of U.S. workers who get neither a pension or a match? And E will still be making $156k a year.

      You are so hung up on E that you are comparing apples and oranges. And… it is still invalid to compare pensions outside the context of total compensation.

      What I am asking about is a pension system that is adequate and sustainable, public or private.

      That’s why I brought up Netherlands. Generally speaking, the Dutch (and Denmark) have around a 70 percent retirement replacement rate, and the employee contributes12-18 percent of wages. 90 to 94 percent are covered, mostly through mandatory employer plans. Each has some form of risk sharing. Denmark is primarily a DC plan, as I understand, while the Netherlands is DB.

      Their pensions are reportably the most sustainable in the world, yet they have had to make reforms since 2008, with more reforms on the way.

      So my question is, the way the economics and demography is changing, what do we need to do to make retirement security sustainable? Will properly reformed DBS still work?

      We can worry about El guapo later.

      Reply

      • I don’t think either one of you need to worry about me. I will be long out of police work before any current police officers will have their pensions frozen. There are almost NO cops in the whole country who are NOT covered by a DB pension plan. I’m in a very high cost of living area compared to most.

        Reply

      • Posted by Anonymous on October 13, 2019 at 1:22 pm

        Not worried, E.

        When I first went to my (future) wife’s house I saw a book on the shelf. “What does this mean ‘IMOK YOUROK’?

        You are OK. Me too. I can’t seem to make the point. I am asking about the viability of sustainable retirement security. For anyone.

        TL is apparently more concerned that someone is getting more than they should. That is a valid concern, but a separate problem.

        Let’s take one at a time. “Burypensions” that’s the blog. Then we can do Burywages, maybe.

        Reply

  10. Posted by Anonymous on October 12, 2019 at 11:41 pm

    But the original point was that underfunded pensions are not just a problem for public workers or MEP plans. If that were the case, one might automatically assume that the problem really is greed and/or corruption. But this is a problem that also hits the more stringently regulated and, perhaps, less generous single employer private pensions (GE, e.g.)

    And public and private pensions all over the world. Even the Dutch and Danish systems, considered the most stable in the world. They have already made reforms, with more on the way.

    The question is, of course some plans are poorly governed, but even the best plans are apparently no match for the problems of capital losses, low interest environment, longer life expectancy, and lower worker/retiree ratio.

    Does that mean DB pensions are entirely defunct, as some say, or is there still a way to make them sustainable?

    And should we?

    Reply

    • Posted by Tough Love on October 13, 2019 at 12:03 am

      Nonsense, Single employer Private Sector DB Plans are funded at at average level of about 85% using MUCH MCUH more conservative assumptions and methodology than Public Sector (or Multi-employer) Plans.

      Picking one example (General Electric) of a Private Sector Plan with problems means nothing.

      Reply

    • Posted by Anonymous on October 13, 2019 at 1:30 am

      Not nonsense. Of course private plans are better funded.

      But.

      They are also disappearing rapidly, not just GE. They have been dissapearing regularly since the 80s. Pundits are recommending DC plans, not just for public employees, but for private plans also. That was the question, are DB plans virtually defunct, and/or should they be.

      There are “experts” adamantly on both sides. I am on the side that DB pensions should be kept, with proper reforms, for both public and private sector workers.

      The question is, what reforms are needed?

      Reply

      • Posted by Tough Love on October 13, 2019 at 3:00 pm

        What reforms are needed ?

        (1) Provide IDENTICAL retirement security (and wages and benefits) to comparable Public/Private Sector workers (INCLUDING Police*).

        (2) In the current low-interest, lower expected-return environment, contribute WAY more than what has historically been contributed.
        ————————

        * Ok, I’ll give in a bit ……….. you can retire at 62 vs 67, but NOT under a richer benefit or contribution formula. And of course 95% of the BS (e.g. I stapled my trigger-finger) “Disability” retirements must end.

        Reply

      • Posted by Anonymous on October 14, 2019 at 8:59 pm

        I think we may be looking at retirement age the wrong way. Since the late 90s the average retirement age has been slowly growing from 59 to 61-63. Even for most public workers.

        67 is going the wrong way. In the last two decades, most people have planned on retiring at 65-67.

         “Mann Tracht, Un Gott Lacht” 

        The average is still early 60s. Maybe Gott is trying to tell us something.

        Get that older guy out of the way to open up jobs for those just starting out. The younger ones in most cases will be more productive anyway.

        Win/win.

        Reply

  11. Posted by Anonymous on October 13, 2019 at 3:54 pm

    You don’t get it. Please forget about IDENTICAL for just a bit. We can do that later.

    Private sector single plans are usually financed entirely by the employer. And, because of ERISA, they are in better shape than most public plans.

    Although, still, private plans are generally moving from DB to DC plans. Is that necessarily a good move?

    Hypothetically, if we had a public plan financed entirely by the employee. Entirely, like an IRA. No employer (taxpayer) contribution. No match. None. No risk sharing, no back up, nothing. If the plan gets underfunded, freeze accruals, no new enrollees, same restrictions as ERISA.

    Would that employee be better off with an IRA type retirement or a DB plan administered by the employer but with zero employer funding? Zero.

    Assume, like the Dutch, an 18 percent of wages contribution, could that employee reasonably expect 70 percent income replacement for life?
    1) I don’t know if that includes the average 11 percent pay as you go SS type gov. pension.
    2) I believe they base the 70 percent on adjusted lifetime earnings, not FAS.

    Or would they be better of with an 18 percent mandatory DC plan? Again, financed entirely by the employee.

    Don’t worry about identical. The taxpayer is out of the picture on this one.

    Reply

    • Posted by Tough Love on October 13, 2019 at 8:45 pm

      Quoting Stephen……………

      “You don’t get it. Please forget about IDENTICAL for just a bit. We can do that later. ”

      Ok, it’s “later” now………. so tell us, how we/how we get to IDENTICAL Public/Private Sector Sector retirement security, or equivalently Taxpayer contributions towards Public Sector Retirement security (pension & retiree healthcare benefits) no greater than what the typical Private Sector employer contributes towards the retirement security of his/her workers.

      Reply

      • Posted by Tough Love on October 13, 2019 at 10:21 pm

        And WHY do Taxpayers need (and DESERVE) it:

        The AEI Study authored by Dr. Biggs ……………..

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

        There are VERY informative Graphs comparing the PUBLIC/PRIVATE Sector for Wages (Figure 1), active workers healthcare premiums (Figure 2), Retirement security contributions such as Pensions & SS (Figure 3), Value of accruing Retiree healthcare benefits (Figure 4), and Fringe Benefit (Figure 5).

        The first, “wages” shows the Public Sector DISADVANTAGE (the Stephen noted), while the other four show a very material Public Sector ADVANTAGE.

        The net impact of all of those (Figures 1 through 5) are summarized in Figure 6 which shows PUBLIC/PRIVATE Sector Total Compensation differentials by state. Eight of the 50 States show a Public Sector DISADVANTAGE ranging from -1% (of pay) to -6%. The other 42 States show a Public Sector Total Compensation ADVANTAGE ranging from 1% to 42%, likely averaging on the under side of 15% with the State-specific %s weighted by state population.

        THIS (Figure 6) is where the 23% Public Sector Total Compensation ADVANTAGE in both NJ and CA (that has been mentioned numerous times on Mr. Bury’s Blog) comes from.

        Reply

      • Posted by Anonymous on October 14, 2019 at 6:54 pm

        This AEI paper is one of the most enlightening I have read on this topic, for several reasons. I highly recommend reading it, and rereading.

        Figure 6 is probably one of the most cited… and least significant items in the paper…

        Except, the relative value comparisons between the states is probably still relevant for the most part. States with very high population centers like California, Illinois, New Jersey, Connecticut, etc. will probably always have higher pay and benefits for public workers than rural states. The ranking will likely not change much.

        The most important part of the paper, in my opinion, is the explanation of the compressed compensation, with a floor on the lower level employees pay and the ceiling on the upper levels. It has been described tangentially in similar studies, but this is the first I saw to describe the phenomenon in more detail, and to quantify it somewhat, if only on a nationwide basis. (As opposed to state level.)

        Second best feature was the methodology section. It was the most detailed I have seen of any similar paper. There are several methods of comparing public to private compensation, each with it’s own strengths and weaknesses. This human capital method is considered the gold standard (CBO) for it’s purposes. But the paper describes some of the strengths and weakness of the method, of the available data, and of the assumptions and opinions which can affect the outcomes. Take everything with a grain of salt and a good peer review.

        As far as the absolute values of pay and pensions, this paper is based on data up to ten years old, or more. Ten of the most volatile economic years in our lifetime. It would be helpful to see a more recent, peer reviewed paper similar to this one.

        There are several 501(c)(3) foundations capable of this type of research. I, for one, would be willing to donate to one or more.

        Reply

        • Posted by Tough Love on October 14, 2019 at 10:05 pm

          Quoting ……………

          “The most important part of the paper, in my opinion, is the explanation of the compressed compensation, with a floor on the lower level employees pay and the ceiling on the upper levels.”

          It figures that YOU (a CA Public Sector retiree and lover of everything “Union”) would focus on “splits” by income group and IGNORE that what financially impacts the Taxpayers ……. the NET Public/Private Sector total compensation differential for ALL income groups combined ………. which for NJ & CA shows a 23% of pay PUBLIC Sector ADVANTAGE …… and nationally about a 15% Public Sector Total Compensation ADVANTAGE.

          Reply

          • Posted by Anonymous on October 14, 2019 at 11:51 pm

            TAXPAYERS!

            How would you feel if the NET Public/Private Sector total compensation differential for ALL income groups combined were LESS than zero?

            It is possible mathematically. It is simple.

          • Posted by Tough Love on October 15, 2019 at 1:05 am

            Quoting Stephen Douglas (again poating as Anonymous) …………

            “How would you feel if the NET Public/Private Sector total compensation differential for ALL income groups combined were LESS than zero?”

            But it NOT, is it? Weighting the State-specific Total Compensation Public/Private Sector differentials (by State population), nationwide the PUBLIC Sector has on the underside of a 15%-of-pay ADVANTAGE.

            No matter how much you try to “spin it” you CANNOT get past that result …. VERY CLEAR from the AEI STUDY Figure #6 (linked in an above comment) Figure #6.

        • Posted by Anonymous on October 14, 2019 at 11:41 pm

          You know how to fix this. Reduce the compensation of those in the income groups who are actually above market compensation. The differential for “ALL income groups combined” will automagically disappear. It’s math. It’s a tautology. Even a fourth grader could do it. Win/win.

          An honest fourth grader would admit it.

          This is real life, not alternative facts. “No collusion, no obstruction” doesn’t work here.

          Reply

      • Posted by Anonymous on October 14, 2019 at 7:38 pm

        FWIW…

        Old paper, old data, yet…

        I think most of the authors of these various studies agree on the wage data. They should. They use the same databases and much the same methods.

        The overwhelming reason this paper is an outlier is in the interest rate used to discount pension values. (4.3 percent, which is the average yield over the past decade on 20-year Treasury securities.)

        So, the data is old. So what? Almost every state since 2008 has reformed their pensions via decreased formulas and/or increasing employee contributions. Wages, at least according to Biggs have increased more slowly in the public sector than the private.

        This double whammy should reduce the public sector compensation advantage compared to that in 2012-14.

        Not according to Biggs (and I do not disagree, following his logic.*) Although the relative difference in dollar amounts may have decreased, the average yield over the past decade on 20-year Treasury securities has also decreased, resulting in possibly an increase in the cost/value of pensions. How much?

        I can’t find his latest paper right now, and would wait for a second opinion anyway.

        *I don’t necessarily agree, either As Doctor Lee said, “Something is wrong here.”

        What do you get if you put ten economists in a room?

        Eleven opinions.

        Reply

        • Posted by Rex the Wonder Dog! on October 14, 2019 at 10:10 pm

          Wages, at least according to Biggs have increased more slowly in the public sector than the private.
          Oh My DOGGIE! Do your WHOPPER lies never stop Dougie?
          🐶🐶🐶🦴🦴🦴

          Reply

        • Posted by Tough Love on October 14, 2019 at 10:11 pm

          Quoting …………… “Almost every state since 2008 has reformed their pensions via decreased formulas and/or increasing employee contributions. ”

          Yup many States have …………. but in almost ALL cases, ONLY for NEW workers (and sometimes non-vested workers). That’s not the way pension reform works in the PRIVATE Sector, wherein formula-reductions and provision changes almost always include the future service of ALL workers (not just the new an unvested).

          What makes PUBLIC Sector workers so “special” that not only should they be granted MUCH MCUH greater retirement security, but also MUCH greater protections from reduction, even for their FUTURE service …………. and all on the Taxpayers’ dime ?

          Reply

        • Posted by Anonymous on October 14, 2019 at 11:21 pm

          Public Employee Salary/Benefits Growth

          Posted April 11, 2019 by burypensions in Uncategorized

          “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 Anonymous on October 14, 2019 at 11:29 pm

          Most pension formula reductions are for new employees. Increased contributions typically are paid by both future and current employees.
          IMHO, pensions are a long term commitment. They should be subject to adjustment when necessary, but not easily or capriciously.

          Reply

          • Posted by Tough Love on October 15, 2019 at 1:13 am

            Quoting …………….

            “Increased contributions typically are paid by both future and current employees.”

            Big F’n deal ……… the workers pay an additional 1 or 2 % of Compensation towards a pension that for some has a NORMAL COST (w/o amortizing PAST service unfunded liabilities) of 40% to 60% of pay.

            If the ludicrously excessive BENEFIT levels were reduced by 50%, they’d STILL be MUCH greater than what the typical Private Sector worker gets in retirement security from his/her employer.

            Yea………… it’s “necessary” now.

          • Posted by Tough Love on October 15, 2019 at 1:16 am

            Stephen,

            Your opinions are anything BUT “humble”, being a retired CA Public Sector worker, a lover of everything “Union”, possibly a paid Union “mouthpiece”, and having a to-hell-with-the-Taxpayers attitude.

          • Posted by Anonymous on October 15, 2019 at 6:22 am

            You phony old reprobate.

            Posted by Smooth Moderation Truth on April 18, 2016 at 1:18 am

            “…You felt compelled to use this case to repeat your usual rant about “fraudulently obtained” and “absurdly generous pensions” and “Union-BOUGHT Elected Officials”

            Not for the first time. Nor, sadly, the last.

            And you were wrong.

            Again.

            “All I did was what I usually do, check the facts.”

            How can we believe anything you say?
            Don’t even try to pretend to be unbiased.

          • Posted by Tough Love on October 15, 2019 at 11:16 am

            Stephen,

            You posted the identical garbage on Mr. Bury’s more recent Blog-post, so I’ll repeat my VERY On-Point reply here:
            ————————————-

            Stephen Douglas (aka Anonymous above) searches for the few occurrences where on a true/complete (i.e., PHDs & Professionals working the same # hours/wk) comparison that Public Sector worker have lower Total Compensation than their Private Sector counterparts. Sure it occurs, but it’s the anomaly and far far from the norm.

            MOST Public Sector workers now get pensions with such great value (due to VERY rich pension formulas, VERY early retirement ages, subsidized early retirement adjustment factors, phony “disability” retirements, and most-often COLA increases that are unheard of in Private Sector Plans) that to fully fund them over the employee’s career would require TAXPAYER contributions that are 5 to 10 TIMES (yes, you didn’t read that wrong) what the typical Private Sector employee gets in retirement security (mostly in 401K matching contributions) from his/her employer.

            And then we layer ON TOP OF that ludicrously excessive (and hence costly) pension, FREE or heavily subsidized retiree healthcare benefits often costing taxpayers over $25K annually ……….. and VERY RARE as an employer-sponsored benefit in the PRIVATE Sector.

            Such Taxpayer-funded benefits ……. that Private Sector workers almost never get from their employers …… need to end. Sure, some Public Sector workers earn less in cash wages than their Private Sector counterparts, but it’s TOTAL COMPENSATION that matters (and what financially impacts the Taxpayers), and any shortfalls in Public Sector cash wages is almost always vastly erased by the HUGE cost of the very rich pensions and benefits that Public Sector Unions have BOUGHT from our Elected Officials with threats (to upend their re-election if they don’t support their agenda) and BRIBES disguised as campaign contributions.

          • Posted by Anonymous on October 15, 2019 at 12:40 pm

            And you were wrong.

            Again.

            Not for the first time. Nor, sadly, the last.

          • Posted by Tough Love on October 15, 2019 at 9:04 pm

            Stephen,

            You BS doesn’t fly here ………….. find another outlet to peddle your lies.

          • Posted by Anonymous on October 16, 2019 at 12:21 am

            Posted by Tough Love on April 16, 2016 at 5:02 pm

            The groups impacted by MPRA are FAR FAR different than Public Sector workers, where pensions are so absurdly generous (and so fraudulently obtained from Union-BOUGHT Elected Officials) that they were NEVER justifiable ….and SHOULD BE materially reduced.

            These workers have run-of-the-mill pensions, clearly very modest (and MULTIPLES LESS) than those granted Public Sector workers.
            ——————————-
            No matter how you shake and dance…

            That is a lie.

            One of many.

            The only thing worse is a lie …and a rant.

          • Posted by Anonymous on October 16, 2019 at 12:23 am

            And you were wrong.

            Again.

          • Posted by Tough Love on October 16, 2019 at 12:26 am

            Stephen,

            STILL ???

            Still harping on Public Sector comparisons to MEP plans ?

            Why is that …….. perhaps because your BS doesn’t fly when you compare Public Sector compensation to the compensation of the 94% of all Private Sector workers who do NOT belong to Unions ?

            ——————-

            You really need to come up with some new (and TRUTHFUL) material …….. you’re starting to sound as dumb as a light-bulb-changer.

          • Posted by Anonymous on October 16, 2019 at 12:44 am

            Now that’s called diversion.

            Simple question. Yes or no.

            Was that a lie?

            Hint. The answer is yes.

          • Posted by Tough Love on October 16, 2019 at 12:58 am

            Stephen,

            Lets see, there are 2 parts to what you are quoting that I stated (3 years ago …. a bit of a “stretch” for material wouldn’t you say ?)

            (A) The groups impacted by MPRA are FAR FAR different than Public Sector workers, where pensions are so absurdly generous (and so fraudulently obtained from Union-BOUGHT Elected Officials) that they were NEVER justifiable ….and SHOULD BE materially reduced.

            (B) These workers have run-of-the-mill pensions, clearly very modest (and MULTIPLES LESS) than those granted Public Sector workers.
            —————————————————————-

            Is (A) correct ? ABSOLUTELY !

            Is (B) Correct ? Certainly not for EVERY MEP Plan ……. as clearly you have dug up a few that do have generous benefits. Did you really think I was commenting on the database of EVERY MEP Plan out there ?

            As you have often posed that I do …………. why don’t you research EVERY MEP Plan, it pension structure, and exactly (point by point) how it compares to Public Sector pensions of comparable workers …………. and get back to us.

          • Posted by Anonymous on October 16, 2019 at 1:55 am

            No, not a stretch. Just one of many examples of biased assumptions combined with misplaced arrogant certainty.

            You were wrong, again, no matter how you try to justify it.

            And, I see a pattern has developed in this discussion again.

            My apologies John.

  12. Posted by Rex the Wonder Dog! on October 16, 2019 at 12:05 pm

    You really need to come up with some new (and TRUTHFUL) material …….. you’re starting to sound as dumb as a light-bulb-changer.
    LOL…Not Happening, Dougie is incapable of being honest, and telling the truth. All spin from a hot air bag.
    🐶🐶🐶🦴🦴🦴

    Reply

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