Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: muawiyah

You are mistaken about the source of funds. An employer pays the total cost of compensation including salary, fringe benefits, and retirement. Government mandates may impose additional costs on the employer (such as payroll taxes) and reduce the take home salary of employees. The ultimate source of all contributions to retirement is the employer although your salary is restricted a little for a contribution.

You are also mistaken that the contributions (both employer and employee) are equal to the amount of deferred compensation provided by the FERS plan. I have just finished analyzing a plan very similar to FERS. The Florida Retirement System (FRS) provides the same benefit level (1%) with retirement beginning at age 55. FRS does not provide the early Social Security benefits. The FRS COLA (automatic 3%) is lower than the FERS COLA. My analysis indicates that the average surplus deferred compensation (value of retirement benefits beyond account balance (contributions compounded at a conservative interest rate) is more than $200,000. The surplus deferred compensation is much higher for professional and administrative employees with more opportunity to manipulate salary in their later years.

State retirement plans are funded while federal retirement plans are unfunded. There is no portfolio funding your benefits. Congress has already spent all money contributed to your retirement. Future taxpayers are entirely responsible. Any contributions made to your retirement are worthless for funding future benefits. The bookkeeping does not matter.

You are arguing for additional compensation. The USPS contributions are funded by consumers and taxpayers. Employees are not funding anything. You are trying to obtain additional compensation at the expense of taxpayers and consumers.


110 posted on 06/15/2010 6:33:11 AM PDT by businessprofessor
[ Post Reply | Private Reply | To 103 | View Replies ]


To: businessprofessor
The error in your analysis is your estimation of how many years the employees work for the government. With your typical federal employee becoming an employee at 35, he or she is going to have only 20 to 25 years in service when they retire.

Your 16 year old brother in law who got his state job already, will have 50 years in when he retires, with disability, at 66!

The difference is the type of jobs the federal government has ~ auditors, accountants, lawyers ~ and the type of jobs the state governments have ~ highway work crews, sign painters, lots and lots and lots of "board members".

A comparison of the systems, by themselves, doesn't give you the answer on aggregate payout to the retirees.

118 posted on 06/15/2010 11:33:37 AM PDT by muawiyah
[ Post Reply | Private Reply | To 110 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson