Brown to seek sweeping Calif. pension rollbacks

[IamK]

Source: AP

SACRAMENTO, Calif. (AP) — Gov. Jerry Brown is set to propose sweeping rollbacks to public employee pension benefits, including raising the retirement age to 67 for new employees who are not public safety workers and requiring employees to pay more toward their retirement and health care.

A draft proposal of the plan obtained by The Associated Press late Wednesday says the governor will also propose a mandatory "hybrid" system in which future retirees would get their retirement from a guaranteed benefit as well as a 401(k)-style plan subject to market whims.

The plan being unveiled Thursday also would end so-called pension "spiking" that lets employees boost their payouts by including overtime and other benefits, and end the practice of buying additional service credits.

The administration estimates its proposal would save about $900 million annually


Read more: http://news.yahoo.com/brown-seek-sweeping-calif-pension-rollbacks-023421049.html

[Name removed]

1. Deleted message

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[HDPaulG]

8. He is one of the 1%

And does not prevent police violence toward peaceful protesters in CA...A Wall Street-er

[hedgehog]

2. Why not just place a maximum on overtime to prevent "spiking"?

If a person is working 20 hours or more overtime, week after week, there is no way the employer is getting a decent return.

[YvonneCa]

28. Some state employees are contract....

...not hourly workers. They work so-called 'overtime' (more than contract hours) without extra pay.

[hedgehog]

30. I think that unpaid overtime would have no effect on an eventual pension.

Frequently, union pensions are based on the highest paid three years in the last five years of employment. There are insane situations in which employees ostensibly work over 100 hours a week for weeks at a time. my guess is that a lot of the so-called over-time is spent holed up somewhere sleeping. Newspapers pick up on the exaggerated pensions that result, and present these to the public as typical pension amounts.

[thecrow]

3. "proposal would save about $900 million annually..."

And may I ask whose pocket will that go into?

[slackmaster]

4. Not to mention being only a small fraction of the defecit.

:argh:

[TheWraith]

6. It would go towards California's MASSIVE budget deficit.

Lest we forget that little part.

[Cant trust em]

7. minor detail. nt

[defendandprotect]

5. Wow -- never thought I'd see Jerry Brown selling himself and government -- !!

[MurrayDelph]

14. I missed the /sarcasm sign

Really. I am not at all surprised, as I am old-enough to remember him "embracing the spirit of Prop 13" by retroactively reducing the first raise state workers had had in three years (which had been negotiated as a retention bonus for not striking three years earlier).

My then-future wife was one of those effected.

[defendandprotect]

15. You're better informed about him that I was ....

When he ran for president "We the people" -- I was a delegate for

him in NJ -- and didn't know that about Prop13 and Brown.

Sad --

[grantcart]

9. The US hybrid (FERS) is a much better system than the pension only

system (CERS) system that preceeded it.

The difference for the average worker making average contributions and getting average returns is in the hundreds of thousands of dollars.

Don't know what they are proposing in CA but just because it is hybrid doesn't mean that it is bad.

[Lasher]

10. A hybrid 401(k) is better than a Defined Benefit Pension Plan?

Please make your case.

[ProgressiveProfessor]

13. For one thing, its portable

You take the 401K like part with you when you leave. No golden handcuff

[Lasher]

17. Ha ha ha, you sound just like our corporate HR hucksters!

They told us how great it was when they converted our Defined Benefits Pension Plan to a Cash Balance Plan. We were screwed. We had a 401(k) savings plan in addition to our pension plan. Somewhere along the line they started calling it a 401(k) pension plan, thinking we wouldn't notice when they capped the actual pension plan. After that we still had a pension plan, ya see. It was a 401(k) savings - I mean pension - plan.

But that's what today's employee wants, they said, a portable 401(k) that they have more control over. No, what today's (and yesterday's) employee wants is a Defined Benefit Pension Plan or its equivalent. It's the HR hucksters who want Defined Benefit Pension Plans gutted by turning them into Cash Balance Plans and then replaced with 401(k) savings plans where the employer contributes relatively little.

Same thing with cafeteria medical benefits. It's what today's employee wants, the hucksters said. I said during that meeting that I appreciated all they were doing for me with these improvements but I told them I would just stay on the old medical plan so that I could save them so much trouble. The HR huckster didn't seem to appreciate my offer to make this sacrifice, and informed me that staying on the old plan was not an option.

Oh and by the way, once you have accrued pension benefits they cannot be taken from you if you leave. You don't have to get screwed with a 401(k) in order to acquire portability.

[ProgressiveProfessor]

22. Feds abanonded defined benefit decades ago and generally the employees are better of

If you talk to the employees. The golden handcuff period was the problem.

[Lasher]

23. You have repeated your unjustified assertion, nothing more.

It's just plain silly to claim that Cash Balance Plans and 401(k)s are as good for employees as Defined Benefit Pension Plans. You want to talk to employees about it? I was an employee and I lived through the plunder of employee pensions and retiree medical benefits. Talk to me. I say you're one hundred percent wrong.

This is one reason why we have the OWS movement. This part of the American Dream was stolen from middle class workers. The savings were then used to declare phony corporate profits. Sleazy accountants like to call this form of plunder a reduction in known future liabilities. Then it was multi-million dollar performance bonuses all around for chief executives who had done nothing at all to grow their businesses.

This is one clear way the disparity of wealth has significantly increased during the past 3 decades.

[ProgressiveProfessor]

25. Are you a Federal Civil Servant? That was whom I was referring to...

And by and large they are happier than what was available under FERS vs CSRS according to the employee organizations, not just OPM. I use that as an example that it can be made to work.

The real issue is that few stay at one place long enough to vest, let alone accrue significant retirement benefits in classic defined benefit plans. That is the reality of the workplace today. That trend is most common in the high tech area, less in heavy manufacturing, which is decreasing rapidly. Typical defined benefit plans are losers for the Gen X and their successors who do not stay in one place or at one company.

The plundering of the retirement plans started well before the forced conversions, and is another serious but separate issue. Conflating the two is disingenuous.

[grantcart]

19. It is not a hybrid 401k it is a hybrid pension package

Federal workers before 1984 would receive the CSRS plan with no social security and no pension.


Here is how it would look for a Customs agent that would reach a grade 12, non management system.


CSRS

Grade 12 35 year federal employee earning $83,000 for their high threes would receive a CSRS monthly pension of $ 4,147

Under FERS

Grade 12 35 year fedeeral employee earning $ 83,000 for their high threes would receive a FERS monthly pension of $ 2,179


plus social security - about $ 1500 per month.


plus results from their Thrift Savings Plan - their 401K



The federal government gives workers 1% of their salary and matches another 4%. Contributions to the 401K are pretaxed so if it is a two income family it will also reduce their taxes.

You can see the government projections of the TSP here on page1, the numbers used are very middle of the road and not considered controversial;

https://www.tsp.gov/PDF/formspubs/tspbk08.pdf

A lower paid federal worker making % 40,000 and making a 5% contribution would expect to grow their TSP to $ 800,000 over 40 years.

In the case of the customs officer working 35 years if he contributed 5% and made the average 7% annual return he would accumulate $1.2 million. If he contributed 15% then it would be $ 2.4 million.

I know of nobody in the federal system that wants to go backwards and eliminate the hybrid system to go back to the straight pension, and this includes union leaders.

Including the Thrift Savings Plan in the hybrid is a major advantage to people who have lower morbidity because when the retiree dies then the pension stops (if you predecease your spouse then he/she will get 50% until they are deceased). In the hybrid system your family gets to keep what is in your 401k. So it is a major advantage to any group or ethnic group that has lower life expectancy because in the pension system if the person passes 2 years after retirement then there is nothing to pass on while in the hybrid system if they die young then the family will still benefit from the assets in the TSP.



I have talked with hundreds of federal employees and have yet to find one FERS who wishes he had CSRS and any CSRS that doesn't wish that they had gotten FERS instead.


Interesting side note;


If you were a federal employee and invested in the C Fund (SP 500) during Bush's term you would have had no net gain (the only 8 year period that has happened).

If you bought the C Fund at the time of President Obama's innauguration then you would have seen an 85% increase in the value of your investment.

You make a lot more money, ironically, under Democratic administrations than Republican.

[ProgressiveProfessor]

27. You are forgetting the gold handcuff issues

Look at a 15 year employee who then goes elsewhere.

Few realize (outside of Feds) the CSRS was outside of Social Security.

[Joe Bacon]

12. Tell that to my fellow coworkers who saw a big chunk of their Thrift Savings Plan go down the drain!

I'm one of the lucky ones who had enough common sense to stay with the old Civil Service Retirement System. I can remember back in 1984 all of the big Hoopla Reagan stirred up to get people to switch into FERS. All that BS about how the Thrift Savings Plan would give everyone a nice big nest egg at retirement. Lots of my coworkers fell for the BS. And I sure do remember the looks on their faces in 1987 when the stock market crashed and those big nest eggs cracked wide open. I knew it would happen again, back in 2007, people showing me how much they had in the TSP, needling me about making the wrong choice. THen the egg cracked again in 2008 and those who had 100% of the TSP in the stock market saw their nest egg shrink by 40-50%.

Oh, and by the way, the Super Congress is now seriously considering making those under FERS pay an additional 4-6% of their salary into the FERS system, and they're also considering stopping the matching funds for the TSP for FERS employees...

As for me, I've been paying 7%, except for a couple years when Old Fart Bush jacked that up to 9%, yet only credited my account with the base 7%. I fully expect the Super Congress to steal my pension too, because their beloved Kardashians need another tax cut!

[grantcart]

20. If they didn't sell their stock when Bush crashed the stock market

then they wouldn't have lost a dime.

In July under Obama the C fund had recovered all of the losses of the Bush administration.

All of my clients who moved out of the CSI stocks when the Republicans started with the debt ceiling nonsense and then bought back after it was settled are up 25% for the year.

I agree with your general view that if you just leave it you will be a victim but if you move it every time the Republicans start to do something really stupid then you can make a lot of money.

Since President Obama took office the C fund is up 85%.

[mike_c]

18. I'm very happy with the PERS defined benefit plan I worked for and paid into...

eom

[grantcart]

21. Go here

This is a tremendous resource for federal employees looking to maximize their TSP.

No fees, and they don't sell anything.

http://tspcenter.com/

Look at the "TSP Fantasy" league top performers and you can see how some folks are maintaining 20% returns in a flat year.

[ProgressiveProfessor]

26. CALPERS is still in a world of hurt

While it is recovering somewhat, its deep in deep yogurt. While I hope for the best, it would be a good thing to ensure you have some backup plans

Note: I too am paying into CALPERS, but I do have a backup

[Old_Ed_inVN]

11. Nobody reads the full proposal

I am sure that the first thing gov. Brown would put in a bill is that elected officials pay would be cut by 50% & that they would all be on 401s. Also too, they would pay for themownselves health insurance.
He didn't?
End of snark.

[No Elephants]

16. Why don't we just declare open season on retirees and the disabled and be done with it?

Cuts to fuel subsidies for poor people, freezes on Social Security increases, cuts to Medicare and Social Security on the table, cuts to state pensions.

And that's before the Republicans say a word.

Great election strategy, too.

[LuckyLib]

24. An eye-opening look at California state $$ troubles, and how cities are suffering,

in a Vanity Fair article about Arnold.

http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111

<snip>

But when you look below the surface, he adds, the system is actually very good at giving Californians what they want. “What all the polls show,” says Paul, “is that people want services and not to pay for them. And that’s exactly what they have now got.” As much as they claimed to despise their government, the citizens of California shared its defining trait: a need for debt. The average Californian, in 2011, had debts of $78,000 against an income of $43,000. The behavior was unsustainable, but, in its way, for the people, it works brilliantly. For their leaders, even in the short term, it works less well. They ride into office on great false hopes and quickly discover they can do nothing to justify those hopes.

David Crane, the former economic adviser—at that moment rapidly receding into the distance—could itemize the result: a long list of depressing government financial statistics. The pensions of state employees ate up twice as much of the budget when Schwarzenegger left office as they had when he arrived, for instance. The officially recognized gap between what the state would owe its workers and what it had on hand to pay them was roughly $105 billion, but that, thanks to accounting gimmicks, was probably only about half the real number. “This year the state will directly spend $32 billion on employee pay and benefits, up 65 percent over the past 10 years,” says Crane later. “Compare that to state spending on higher education , health and human services , and parks and recreation , all crowded out in large part by fast-rising employment costs.” Crane is a lifelong Democrat with no particular hostility to government. But the more he looked into the details, the more shocking he found them to be. In 2010, for instance, the state spent $6 billion on fewer than 30,000 guards and other prison-system employees. A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary. The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. The same fiscal year that the state spent $6 billion on prisons, it had invested just $4.7 billion in its higher education—that is, 33 campuses with 670,000 students.

[SharonAnn]

29. but the prisonlobby is generous with politicians and they get what they pay for.

Schools and teachers? Not so much.