Sorry moderator here’s the link
http://www.businessinsider.com/federal-employees-pension-system-deficit-2010-10
I would start by cutting all pay and benefits in half for all nonmilitary and intelligence personnel.
I’m not necessarily questioning his numbers but he think he has his retirement systems wrong.
Feds hired pre-1984 were in the Civil Service Retirement System (CSRS) and that is a defined benefit program into which people paid a percentage that, I believe, was slightly higher than Social Security. They did not pay into social security and do not receive benefits unless they paid their quarters through another job.
FERS, which covers the rest of feds except for maybe some agency-specific retirement systems which might be out there, is based more on a 401k type of deal (Thrift Savings Plan) where employees pay Social Security, a little bit to CSRS and up to the IRS maximum into TSP. People who retire under this program will receive a small pension (not like CSRS but not nothing either), Social Security, and whatever they have in their TSP account.
It’s still a very large number but FERS itself is not a defined benefit program.
Sounds like marxism to me.
This presents a great opportunity to shrink the gov’t. Give the fed employees the option to retire early with lower pension benefits. Then, don’t replace them.
Failing Pensions....great government ‘excuse’ to seize 401k’s and IRA’s in the name of Fairness.
I have known about the FERS problem since the mid 1990s. The trust fund is a fiction as is the trust fund for Social Security and Medicare. FERS is just a pay as you go plan. Plan contributions are either spent on current benefits or other government needs. Effectively, the taxpayer has borrowed from the plan. Borrowed funds can only be repaid by future borrowing, tax increases, or reductions in spending in other programs. The federal government should never have been allowed to create a defined benefit plan.
Defenders of FERS indicate that its benefit levels are lower than most state plans. The benefit levels are deceiving however. Federal employees contribute little to FERS (0.8 percent). The employer contributes 11.2 percent. If a FERS employee retires before Social Security retirement age (62 for reduced benefits), the FERS employee receives the Social Security payments until reaching the minimum Social Security age. In addition, FERS employees also have an additional 401K type plan with 5 percent employer contributions. FERS employees also have early retiree medical benefits, a very valuable benefit. In sum, federal employees have a cadillac retirement plan.
Federal salary levels are now well above private sector salary levels in many areas. Federal salaries have still increased during the recession. Federal salaries have never been reset like the private sector. For example, I have a friend working as a middle manager in a federal government agency in Denver. He makes $130,000, a salary level that he could not come close to achieving in the private sector in Denver.
Federal salaries are heavily influenced by the government spending bubble in DC. Government spending has made the DC area into an oasis during this recession. Both government employees and contractors in the DC area have done extremely well during the recession.
It is time for major reform to federal pensions. The federal government does not even account for its unfunded liabilities. The federal government must get out of the retirement business. Federal employees should receive a 401K contribution. Federal employees should be expected to work until normal retirement age unless they can provide enough retirement savings through their 401K for early retirement. Federal employees should not have early retiree medical benefits.
Pulling FERS out for this sort of special anal-ysis does not advance our understanding of what is going on.