Muawiyah,
Almost none of us get the Money. I bill by the hour, and I still have the standard deductions. We all know that we have to make comparisons against non-paycheck benefits.
You have to figure in the equivalent that a real pension program would be. How much in savings out of a paycheck each year would it take to have the millions to fund a really nice retirement from around age 55 to 75? That’s real money - I don’t have any pension program and I often think about how much better off I would be with a teacher’s pension and job security.
I disagree about the health care costs too. I was with a global software company and didn’t really think that much about our “cafeteria program” - cause we didn’t see the real cost. And the benefits were great. But then I learned that it was costing 18 thousand per year. And it was easy for politicians to give on these nebulous benefits so I don’t doubt that they have the high-end Cadillac plan because these were easy for the politicians to give in negotiations.
And then factor in the weeks off at holiday time, the summers off. If you had job security, how much would you give for that kind of time freedom.
Then, as a Cheesehead let me also say that my school district has had back to back 9 percent tax increases. And the District Executive says that in no way brings them to a sustainable level. Its crazy talk.
Unemployment, employees giving back wages. I find the figures quite believable and I would like the teachers to express gratitude for the great income and benefits that they receive.
And now lets talk about Milwaukee’s ‘worst in the nation’ school performance...
Not everybody retires ~ some die before then. Then, of those who retire, some die early, some die soon after that, and yet others die a long time from now.
There's a scientific field of study called ACTUARIAL SCIENCE. It weighs the probability of death ~ based on actual data regarding death ~ and determines what it will take to sustain the retirement program for all the members out through time.
It also has to account for new entrants, and changing demographics.
Politicians like to ignore all of this since the numbers are huge and that always hurts their heads.
What happens is that your typical financing plan for any retirement system ends up appearing UNDERFUNDED. You have $X going in and $Y going out. Sometimes when the underlying investments are doing good, and new retirements are down, you may have a retirement system that looks OVERFUNDED. That always excites management since so many systems were set up so that companies could "tap" surplus retirement system funding.
Occasionally the fund managers will expand benefits such that the "surplus" gets used on behalf of the members. BTW, that's usually when a retirement system runs into trouble ~ what you have to do is look at the actuarial reports, not just the apparent balance sheet.
One general rule for most retirement systems is that you are not allowed to pass on the benefits to your heirs and assigns (except under very strenuous rules related to disabled survivors, spouses, etc). A typical individual plan would try to leave some surplus "for the kids". A group plan will leave them penniless.
I hope that helps answer some of your questions. The basic idea in a group plan is to build up a fund that can provide a retirement income for the members of the group. Some "win" and some "lose" by dying before they've been paid back.