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mlyonsd
05-16-2011, 01:28 PM
How federal worker pensions might be targeted

By Ed O'Keefe

After years of fighting for and against it, the White House and congressional negotiators are seriously discussing the possibility of forcing at least some federal employees to pay more towards their retirement pension.

As colleague Lori Montgomery wrote in Sunday’s Post (http://www.washingtonpost.com/business/economy/federal-worker-pensions-emerge-as-target-in-debt-reduction-talks/2011/05/14/AFkqTj3G_story.html), “The generous pension system enjoyed by millions of federal workers from clerks to senators and judges has emerged as a key target in negotiations between Vice President Biden and congressional leaders looking to restrain the growing national debt.”

How would it happen? Both sides are tight-lipped on specifics, but President Obama’s bipartisan fiscal commission (http://www.fiscalcommission.gov/), Republicans and outside groups are pushing at least five substantive proposals. Here are the basic details:

1.) The president’s fiscal commission recommended using a federal employee’s highest five years of earnings to calculate benefits for new retirees — whether they’re in the older Civil Service Retirement System (http://www.opm.gov/retire/pre/csrs/index.asp) or the Federal Employee Retirement System (http://www.opm.gov/retire/pubs/pamphlets/fers.asp), which is used for federal employees who joined after 1986. Currently both systems use the highest three years of earnings, but the commission said using the top five years would bring benefits calculations in line with the standards used by private sector employers. Savings would total $500 million in 2015 and $5 billion through 2020.

2.) The fiscal commission also suggested defering Cost of Living Adjustments (COLA) for retirees in the current system until age 62. This would also apply to civilian and military retirees who retire at an earlier age. In place of COLA, the system would provide a one-time catch-up adjustment at age 62 to bring benefits on par with the amount that would have been paid if full COLAs had been in effect. Taxpayers would save $5 billion in 2015 and $17 billion through 2020.

3.) Finally, the commission recommends adjusting the ratio of employer/employee contributions to federal employee pension plans to equalize contributions. The government would save $4 billion in 2015 and $51 billion through 2020.

4.) The cenrist think tank Third Way (http://www.thirdway.org/) also believes feds and the government should contribute equally to FERS, arguing the government is far more generous than private-sector companies. The government contributes 12.7 percent of payroll to retirement accounts while private employers contribute about 5.3 percent. Evening the payments would save $114 billion over ten years, $271 billion over 20 years, and $702 billion by 2050, according to the group.

House Republicans are pushing a modified version of Third Way’s plan, suggesting employees and the government should contribute equally — 6 percent each. But because federal workers currently contribute 0.8 percent, the change would amount to more than a 5 percent pay cut.

5.) Sens. Tom Coburn (R-Okla.) and Richard Burr (R-N.C.) in March introduced a bill that would end FERS’s defined benefit pension for new employees beginning in 2013. The bill would still give federal workers Social Security payments and access to the Thrift Savings Plan with matching funds intact. Current feds and retirees would not be affected, but the changes also would apply to future lawmakers and their staffers.

Coburn and Burr argue that FERS is currently underfunded by nearly a billion dollars and CSRS by $673 billion, but the Congressional Research Service said last fall that the funds will be able to meet their obligations “in perpetuity.”

<SCRIPT> var entrycat = ' Eye Opener, Workplace Issues, Budget' </SCRIPT>By Ed O'Keefe | 06:00 AM ET, 05/16/2011

http://www.washingtonpost.com/blogs/federal-eye/post/how-federal-worker-pensions-might-be-targeted/2011/05/15/AFzBBl4G_blog.html

BucEyedPea
05-16-2011, 01:33 PM
Don't be surprised if they come after private ones next to fund spending.

Amnorix
05-16-2011, 02:24 PM
Yes please.

(statement made to OP, not BucEyedNutcase)

Stewie
05-16-2011, 02:31 PM
So, their salaries are all taxpayer dollars and now they need to pay a portion of their salaries (taxpayer dollars) to fund their pension? Where do I sign up and where's the taxpayer benefit in this equation?

Amnorix
05-16-2011, 02:35 PM
So, their salaries are all taxpayer dollars and now they need to pay a portion of their salaries (taxpayer dollars) to fund their pension? Where do I sign up and where's the taxpayer benefit in this equation?

The reduction of the burden on the government employer is a benefit to taxpayers in this equation. At least, if you're intellectually honest about it. If you just want to decry all government spending and pound your fist on the table that things just aren't how Thomas Jefferson wanted them to be, then have at it.

Stewie
05-16-2011, 02:37 PM
The reduction of the burden on the government employer is a benefit to taxpayers in this equation. At least, if you're intellectually honest about it. If you just want to decry all government spending and pound your fist on the table that things just aren't how Thomas Jefferson wanted them to be, then have at it.

My fundamental problem is that the government is an employer. It's not.

vailpass
05-16-2011, 02:41 PM
Great. But leave military retirement benefits alone, unless you want to increase them.

Amnorix
05-16-2011, 02:44 PM
My fundamental problem is that the government is an employer. It's not.

Whether you like or hate government, it is obviously a separate entity from you, me or the collective masses. I certainly understand the argument that the government does not GENERATE any wealth (though that is debateable in some respects, I would certainly concede that that is by and large true).

But the government is absolutely a separate entity, and that separate entity is an employer. A huge one, in fact.

Amnorix
05-16-2011, 02:45 PM
Great. But leave military retirement benefits alone, unless you want to increase them.

I'd need to know what they are before I'd give carte blanche to ANY group of people. I'm not saying throw the military in with the rest, but nobody gets an automatic free pass in my book.

KC Dan
05-16-2011, 03:00 PM
I'm not saying throw the military in with the rest, but nobody gets an automatic free pass in my book.Yeah, serving 20+ years to keep your AZZ free is an automatic pass....:cuss:

alnorth
05-16-2011, 03:05 PM
I'd need to know what they are before I'd give carte blanche to ANY group of people. I'm not saying throw the military in with the rest, but nobody gets an automatic free pass in my book.

no doubt. I suspect the salary is fine and perhaps could be raised because it is so low, but lets at least see what the military pension is first before declaring that its off the table.

One of the many reasons some states are going broke is because they gave the store away to firefighter and police pensions because they are brave heroes. That may be the case, but if the "hero pension" is breaking the taxpayers, then it should be reduced.

Amnorix
05-16-2011, 03:13 PM
Yeah, serving 20+ years to keep your AZZ free is an automatic pass....:cuss:


You won't find a more ardent supporter of the military than I am. But neither am I going to stick my head in the sand about our dire economic situation. That doesn't mean I would trim a single penny from the military's personnel budget or benefits, but it also means I'm going to LOOK at them to make sure nothing is wrong, or broken, or whatever.

Amnorix
05-16-2011, 03:16 PM
no doubt. I suspect the salary is fine and perhaps could be raised because it is so low, but lets at least see what the military pension is first before declaring that its off the table.

One of the many reasons some states are going broke is because they gave the store away to firefighter and police pensions because they are brave heroes. That may be the case, but if the "hero pension" is breaking the taxpayers, then it should be reduced.

Yes.

And with police/fire, it's absolutely egregious in some areas. Police officers get X percent of pay for life after 20 years, and so they can retire at 50 years old, go become a full time security consultant or security guard, whil drawing a substantial paycheck for the rest of their life from their former employer.

Firefighters -- switch shifts so they can work 48 hours per week over 2 straight days, then work a regular job or be self-employed the other 5 days. Meanwhile get great benefits, and full pension after 20 years or whatever years.

I'm not saying screw them, pay them minimum wage, but cities and towns are getting creamed across the country because they have too many retirees they are supporting in addition to current workers. The former workers give absolutely NO benefit back for their $$, while having economic advantages/opportunities that are completely impossible in the private workspace.

Rain Man
05-16-2011, 03:22 PM
I'd need to know what they are before I'd give carte blanche to ANY group of people. I'm not saying throw the military in with the rest, but nobody gets an automatic free pass in my book.

Agreed. It's a volunteer army.

While I'm glad that people are willing to join the military, the ever-growing parade of freebies to veterans get old sometimes. I bet that 95 percent of veterans or more have never shot a gun at anybody or been shot at. There's a mythology any more that every veteran ran ashore at D-Day or retreated from Chosin or was holed up at Khe Sanh or flushed out terrorists at Fallujah, or maybe all four, and it's simply not true.

RedNeckRaider
05-16-2011, 03:24 PM
Yeah, serving 20+ years to keep your AZZ free is an automatic pass....:cuss:

You would fucking think~

Amnorix
05-16-2011, 03:27 PM
Agreed. It's a volunteer army.

While I'm glad that people are willing to join the military, the ever-growing parade of freebies to veterans get old sometimes. I bet that 95 percent of veterans or more have never shot a gun at anybody or been shot at. There's a mythology any more that every veteran ran ashore at D-Day or retreated from Chosin or was holed up at Khe Sanh or flushed out terrorists at Fallujah, or maybe all four, and it's simply not true.

Especially in the modern army, where the logistical tail is much longer than the pointy head of the spear.

Not that I denigrate the guys who are flying the Predator drones, or manning the silos in Montana, or refueling planes on the Ronald Reagan, but they're not exactly eating MREs in the middle of Iraq or Afghanistan while dodging bullets.

Again, maybe we don't touch their benefits because they're clearly perfectly appropriate. But we are $14 TRILLION in debt or whatever. Everything is in play (in terms of being LOOKED at) from Obama's toilet paper to the pension plan of a Congressional Medal of Honor winner.

Amnorix
05-16-2011, 03:32 PM
You would fucking think~

20 year guy who never served overseas and never fired or saw a bullet fired. He reviewed intelligence and helped sort it and pass it up the chain of command. He deserves EVERYTHING he gets, absolutely no matter how much it is?

Yeah...no.

KC Dan
05-16-2011, 03:34 PM
Agreed. It's a volunteer army.

While I'm glad that people are willing to join the military, the ever-growing parade of freebies to veterans get old sometimes. I bet that 95 percent of veterans or more have never shot a gun at anybody or been shot at. There's a mythology any more that every veteran ran ashore at D-Day or retreated from Chosin or was holed up at Khe Sanh or flushed out terrorists at Fallujah, or maybe all four, and it's simply not true.Did you serve? And, yes, it makes a big difference between a janitor at the Capitol bldg and a military veteran. Just a smidge....

KC Dan
05-16-2011, 03:36 PM
20 year guy who never served overseas and never fired or saw a bullet fired. He reviewed intelligence and helped sort it and pass it up the chain of command. He deserves EVERYTHING he gets, absolutely no matter how much it is?

Yeah...no.Based on the veteran benefits that he is entitled to whatever his duty was for 20 years - YES! They ain't that much unless you were a USN Captain or an Army Colonel that served 30 years. I promise you that enlisted guys doing 20 don't bring much bacon home.

vailpass
05-16-2011, 03:58 PM
I'd need to know what they are before I'd give carte blanche to ANY group of people. I'm not saying throw the military in with the rest, but nobody gets an automatic free pass in my book.

Logical.

Amnorix
05-16-2011, 04:00 PM
Based on the veteran benefits that he is entitled to whatever his duty was for 20 years - YES! They ain't that much unless you were a USN Captain or an Army Colonel that served 30 years. I promise you that enlisted guys doing 20 don't bring much bacon home.


Yeah, well, if they were in the private workspace they would have had to have saved over $600K in just 20 years to equal the benefits that an E-7 would get from their "measly" pension.

http://www.navytimes.com/money/financial_advice/ONLINE.INVEST.PENSION/


So, going back to the E-7 with 20 years of service, what is his military pension of $20,052 per year really worth? Most experts agree that to ensure your retirement funds will last a lifetime, you cannot take out more than 4 percent of your capital each year. If you wish to increase your retirement income each year to keep up with inflation, a 3 percent withdrawal from capital each year is a more reasonable figure. To replace an annual pension of $20,052 based on a 3 percent withdrawal rate, you'd need $668,400 ($20,052 divided by 0.03 equals $668,400).

What is the possibility of accumulating $668,400 over 20 years on your present salary? Even if you assume you can take out 4 percent of your nest egg each year and not use up your money in your lifetime, you'd still need a nest egg of more than $500,000, without allowing for annual increases for inflation.

A pension of $30,069 per year would probably require $1,000,230 in retirement savings.

It is possible to purchase a retirement annuity for you and your spouse with your retirement nest egg. This would give you guaranteed income for life, but it would not increase each year to adjust for inflation. So in 36 years at 2 percent inflation, your money would be worth half as much and your lifestyle in retirement would decline.

Bottom line: A military pension is a very valuable benefit. If you had to save the money to provide your own pension, you would need at least $668,400 to create a pension of $20,055 per year adjusted for inflation. And the continued payment of the monthly pension would depend on the performance of your investments.

vailpass
05-16-2011, 04:02 PM
There have to be MANY areas we can cut before we cut the pensions of those who have served especially those who have seen combat.
those soldiers honored their commitment to their country and their country must honor it's commitment to them.

Amnorix
05-16-2011, 04:08 PM
Did you serve? And, yes, it makes a big difference between a janitor at the Capitol bldg and a military veteran. Just a smidge....

The argument here isn't between whatever they get now and NOTHING. It's the need to analyze the package of benefits they get, determine their value in helping to retain members of the armed forces for the period of time that we WANT them to stay in the military, compared to the cost and affordability of the program.

Pension after 20/30 years, GI bill, VA benefits, etc. We all agree that some poor bastard who got his arm shot off in Iraq deserves everything he gets. We all agree that someone who can't sleep nights because of PTSD should get specialized psychiatric care.

But should a guy who never saw a shot fired in anger but did a good, solid, steady job in a backoffice really get a package of goodies that, assuming he retires at 45 and lives to be 82, could easily be worth well over a million dollars? He's going to make over $700K assume he makes a flat $20K per year for the 37 remaining years of his life, and that doesn't include the COLA, nor GI Bill if he uses it, nor VA benefits and whatever else is out there.

The answer is YES, IF. If we need that package to keep quality guys and gals in the military for 20 years. Yes if we have studies to back up that the attrition rate is unacceptably high if we don't have that kind of package in place. Yes if studies show that it is difficult for 20+ year career military types to transition into the private workforce for the remaining work years.

Amnorix
05-16-2011, 04:09 PM
There have to be MANY areas we can cut before we cut the pensions of those who have served especially those who have seen combat.
those soldiers honored their commitment to their country and their country must honor it's commitment to them.

I'll give you teh combat exemption just because it's such a small portion of the military anymore.

We borrow 40% of what we make. For every dollar we spend, we borrow 40 cents of that.

We need to cut EVERYTHING AND ANYTHING that we reasonably can, without significantly damaging the nation's infrastructure and worldwide competitiveness, and obviously not in a fashion that wrecks the US economy.

alnorth
05-16-2011, 04:14 PM
The size of the pension doesn't look too out of line to me. Teachers, police, and firefighters in many states often get a lot more than that (which is usually too much).

The pension vests too quickly, though. No one should have a right to retire in their 40's unless they are disabled. I'd require 35 years of service and let you retire in your mid-50's.

mlyonsd
05-16-2011, 04:22 PM
Every government worker should pay into their pensions no less on average than a person working in the private private work force.

Especially considering on average government workers earn more in most jobs than their private sector counterparts.

Rain Man
05-16-2011, 04:22 PM
Did you serve? And, yes, it makes a big difference between a janitor at the Capitol bldg and a military veteran. Just a smidge....

Aren't there veterans who do exactly that in the army? I sat next to someone on a plane once who was in a laundry unit or some such thing. She told me that her job was to do laundry.

I just have trouble with this "everybody in an all-volunteer military is a hero" thing. The truth is that most military are not front-line units, and most retired veterans never served during a war (discounting things like Grenada and Panama). People think everyone in a uniform is crawling around shooting terrorists, and there are more of them sitting at a computer screen than holding a gun.

Again, I'm glad they're all there and am glad that they chose that profession, but I'm just as grateful to the people who climb power poles and fix those big transformers, which I suspect is statistically more dangerous.

Rain Man
05-16-2011, 04:28 PM
Yes.

And with police/fire, it's absolutely egregious in some areas. Police officers get X percent of pay for life after 20 years, and so they can retire at 50 years old, go become a full time security consultant or security guard, whil drawing a substantial paycheck for the rest of their life from their former employer.

Firefighters -- switch shifts so they can work 48 hours per week over 2 straight days, then work a regular job or be self-employed the other 5 days. Meanwhile get great benefits, and full pension after 20 years or whatever years.

I'm not saying screw them, pay them minimum wage, but cities and towns are getting creamed across the country because they have too many retirees they are supporting in addition to current workers. The former workers give absolutely NO benefit back for their $$, while having economic advantages/opportunities that are completely impossible in the private workspace.


Exactly. It's the challenge I see increasingly with the government, which is that it's very easy to give away other people's money rather than have any kind of conflict. Government pay and pensions should be matched to private sector pay and pensions. It gives the government folks (who by and large are fine folk - I mean them no offense) an incentive to use their resources to help the rest of society to maximum benefit, which is the reason they're there in the first place.

KC Dan
05-16-2011, 04:39 PM
Again, I'm glad they're all there and am glad that they chose that profession, But, I just don't want to pay for them...so I can provide welfare (SS/Medicare) to millionaires or fund ethanol or oil subsidies. I get it...

vailpass
05-16-2011, 05:05 PM
I'll give you teh combat exemption just because it's such a small portion of the military anymore.

We borrow 40% of what we make. For every dollar we spend, we borrow 40 cents of that.

We need to cut EVERYTHING AND ANYTHING that we reasonably can, without significantly damaging the nation's infrastructure and worldwide competitiveness, and obviously not in a fashion that wrecks the US economy.

Yes, yes and HELL YES.