Posted on 01/09/2006 5:50:32 PM PST by george76
What does IBM know that most New York lawmakers don't?
Judging by Big Blue's recent announcement that it is shifting to a defined-contribution pension plan, it knows that these plans are the only way forward for any company that hopes to stay on this side of bankruptcy court.
Defined contributions have been the norm among small companies for years, but old industrial giants have been slow on the draw.
Some, like General Motors, are still grappling with defined benefit pension programs ...
There's a lesson here for New Yorkers faced with troubled pension systems.
The logic becoming so catastrophically clear to executives in the private sector still eludes lawmakers setting benefits for public employees...
In New York, most public employees in both the city and state can retire at age 55 with partial or - often - full pension benefits.
Many employees pay nothing into the pension fund while they're working...
Such generosity puts New York in a class almost by itself even among other government retirement programs...
This puts New York taxpayers on the hook for staggering amounts of money...
The city's pension obligations shot up an astounding 453% between the 2000 and 2005 fiscal years and are projected to hit $5 billion in 2007...
The state's contributions to the funds that cover all employees outside the city except for teachers rocketed up by 670% between 2000 and 2004.
Taxpayer contributions to the fund for public school employees outside the city topped even that, growing by 730% in two years alone and look set to double again in the next year.
None of these projections yet accounts for any effects of the recently concluded MTA contract negotiation with city subway and bus drivers.
Who pays for this raid?
The ordinary taxpayers...
(Excerpt) Read more at nysun.com ...
Sorry.
Defined contributions where the employee controls the money is the only way to fly.
Defined by yourself is the only way to go.
Thats for sure
Neither the NYC nor the New York State taxpayers can ever cover these public union pension promises.
Retire at 55 when the life span is 80 plus will never work.
The taxes are so high in NYC already.
NY is headed for a crash so severe it will shake the finances of the rest of the states. There will be a federal bailout and legislation passed forbidding public defined benefit plans. In addition, the PBGIC will cause a similar to be passed forbidding corporations from engaging in defined benefit plans. This is the only way to stop these imminent disasters that the unions seem hell bent on creating.
Talks about congress shifting military pensions to USPS to take it off budget...
Stop paying taxes on it and see who owns it L0L! Thats where the RV comes in ;)
It is going to get real ugly.
So the federal taxpayers ( you and me ) try to bail out the NYC's union pension promises.
Then we have the other half of the cities in America headed the same way...
Then we have social security and medicare scheduled to fail in the next few decades...
It aint just NY friend.
Its 60 yrs of FDR type promises coming to roost.
You are correct...
NYC is just the beginning.
It was easy for FDR to make promises that he knew that he would never have to keep.
Articles like this hit pretty close to home for me, so if you don't mind, I'd like to post a question and would appreciate any advice.
I'm in a state-funded pension plan for pubic educators. Been in around 10 years and have accumulated ~200k. I'm 50 and can retire at 62 with a pension of about 40% of my salary, a little more if I stay till 65. The state university pension plan is continually being underfunded by our weasily democratic governor (guessed the state yet?), so I'm very concerned with the funds being there in 15 years when I retire.
I'm still young enough to move to another academic position in another state and take my contribution with me and establish a TIAA/CREF or similar self-managed plan at another institution.
My question is this: stay with this state and take my chances with the pension (with medical coverage), or move while I still have the option to do so.
When I was just starting out in my career at Bell Labs in the early 80's, my father asked me about their pension plan. I had to explain to him that it was a different world than when he first went to work, and that except for the top executive levels, there were no such things as pensions in most private industries any more.
He thought I must be daft, but alas, it was true. Neither Bell Labs, nor Sun Microsystems, nor any of the handful of other companies that I worked at in silicon valley ever offered pensions to the average employee.
Nonetheless, the economics of high tech, and the mania of the 90's, allowed me to (modestly) retire more than a decade before a pension would have kicked in anyway. I don't think todays works are going to be that lucky.
Just some more excellent reasons to never, ever, ever live in New York. Nice place to visit, but wouln't want to live there.
You, like us all, have tough decisions to make.
Trying to predict ones future personal needs is really more art than science.
Trying to predict the future action of other people is impossible.
My advice is to get as much personal control of your money and your future as possible. That might mean a "rollover" of your pension money away from anyone else ( your case, the university pension plan run by strangers) and into financial vehicles (personal IRA's for example) that you control.
Watching all the sad mistakes of the Enron employees (and others) has provided many learning experiences for us all.
First, do not put company stock into your company retirement plan; if the company fails, then you lose your job and your retirement money.
Second, diversify. Own several different mutual funds from different fund family groups. One group (like Putnam lately) may do illegal or stupid things with your money. If you have allot of money, and buy stocks...do NOT put over ten percent of your money in one stock.
Third, Watch expenses hard. Folks like Vanguard family do a good job, generally.
Do you have a local CPA or Certified Financial Planner (who works only on a fee/hourly rate and NOT on commission) who knows you and the local situation well?
And that you trust? Talk with them, do a longer term budget, and read some of the financial stuff.
Do you maximize your Roth IRA's?
I can give you some websites if you want, too.
Good luck.
And never, ever own real estate that they can tax in NY.
Public employees generally do not belong to the failing federal social security system...started by FDR.
They have a legal out.
They often have their own private, financially sound system that will last long after our federal system fails.
The Congress, the US Senate, and most every local government unit know of this double standard.
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