Federal retirement plans almost as costly as Social Security

http://abcnews.com ^ | 10.2.11 | DENNIS CAUCHON

[dragnet2]

Retirement programs for former federal workers — civilian and military — are growing so fast they now face a multitrillion-dollar shortfall nearly as big as Social Security.

The federal government hasn't set aside money or created a revenue source similar to Social Security's payroll tax to help pay for the benefits, so the retirement costs must be paid every year through taxes and borrowing.

The government paid a record $268 billion in pension and health benefits last year to 10 million former civil servants, military personnel and their dependents, about $100 billion more than was paid a decade earlier after adjusting for inflation. And $7 billion more was deposited into tax-deferred accounts of current workers.

In addition, the federal government last year made more than a half-trillion dollars in future commitments, valued in 2010 dollars that will cost far more to pay in coming decades. Added last year:

$107 billion in retirement benefits accumulated by current workers.

$106 billion in new benefits granted to veterans. Retirement

More than $300 billion in the snowballing expense of previous retirement promises that have no source of funding.

The government committed more money to the 10 million former public servants last year than the $690 billion it paid to 54 million Social Security beneficiaries.

The retirement programs now have a $5.7 trillion unfunded liability, compared with a $6.5 trillion shortfall for Social Security.

Outgoing Defense Secretary Robert Gates told Congress in June in his final budget testimony that health care costs "are eating us alive."

Rep. Jim Cooper, D-Tenn., a member of the Armed Services Committee, says retirement benefits are an extremely sensitive issue. "We have a disconnect between all these sacred promises we've made and how they are not backed up by anything," he says.

[dragnet2]

The government is bankrupting private sector America

Those in government are going to eventually find out, what they have done to this country. This will end in a very ugly, complete total collapse.

[reefdiver]

Remember, not only did you contribute to Social Security but your employer did too. It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that’s close to $220,500.

If you calculate the future value of $4,500 per year (yours & your employer’s contribution) at a simple 5% (less than what the govt. pays on the money that it borrows), after 49 years of working you’d have $892,919.98.

If you took out only 3% per year, you’d receive $26,787.60 per year and it would last better than 30 years (until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you’d have a lifetime income of $2,976.40 per month.

The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madhoff ever had.

Entitlement my ___, I paid cash for my social security insurance!!!! Just because they borrowed the money, doesn’t make my benefits some kind of charity or handout!!

Congressional benefits —— free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days, now that’s welfare, and they have the nerve to call my social security retirement entitlements?

[dragnet2]

I understand most federal government retirements benefits, are now nearly double private sector incomes.

[RetiredArmy]

Oh, no worries. They have cut our military retirement benefits darn near to the bone. They continue to increase our payout for health care. No raises. They rumor one this year for the first time in three years. Never mind that 40 years ago when I joined the military, accepted all the moves, the lower pay, all the hardships of a military career, it was because I was told by the government what I had at the end of the road. Instead, they continue to cut our throats. Never mind that they now claim these were promises made by recruiters who did not have said authority to make these promises, even though the Pentagon and all the services and the congress KNEW of these promises, thus participated in frauding us all these years. Naw, no worries. We folks who are past ages to do a danged thing about it are held hostage to the government cutting our throats.

ANY PERSON OUT THERE THINKING OF A MILITARY CAREER, THINK AGAIN! Just do your four years, LEARN a skill that can get you employment on the outside and WALK. You CANNOT TRUST the government to keep any promises to you what you might have in 20 years. Oh, wait, they are wanting to do away with the 20 year retirement. You have to set up a 401k plan now.

[Lurker]

You CANNOT TRUST the government to keep any promises to you

I'm sorry you had to learn that the hard way. I thank God for career military folks. You're the backbone of our Armed Services and it makes me sick to see what's being done.

L

[RicocheT]

Entitlement madness, S.S. broke, state & federal government pension commitments under water - The US economy makes Greece look as solvent as Switzerland. We are so in trouble. Time to stock your bunker some place off in the woods.

[xzins]

There is no reason for extremely well paid civil servants to have anything near the retirement and health plans of the military, whose pay is regularly among the lowest and whose after-service payments have been referred to a deferred pay.

The defense provided by the military is the single most important function of the government. Everything else is less important. Everything.

That a so-called “Education” Department civil servant should make more than a troop risking his life on the line is an abomination. That their benefits should in any way compare with the deferred pay of the military....and sometimes exceed it...is a crime.

The same for the a host of other departments and agencies that Ron Paul, candidate for president, has seriously target for closure because of no value returned.

On the other hand, the threats from China, Iran, Russia, Al Qaeda, etc., are very real.

[Big Horn]

The wealth is all located in and around DC. time to cut out some cushy jobs.

[Eva]

Privatize, Privatize, Privatize, everything that can be out sourced, starting with the Post Office, and go from there to maybe the dept of Energy.

[HarleyD]

You have to set up a 401k plan now.

They plan on taxing 401K if the Democrats have their way. You might as well bury your money in the back yard or put it in the freezer.

[dragnet2]

Agree...The government and their well connected insider co-conspirators, have just about left America dead on the floor.

[muawiyah]

Everybody who is covered by CSRS or FERS (the two major federal retirement systems in effect over the last 50 years) PAID a sum of money to the federal government ~ as an interest free loan.

If you take the amount they paid and simply attribute interest to it ~ that pretty much covers anything they're ever going to pay back as a retirement annuity.

Congress is covered by the same system.

BTW, Postal employees are also covered by the same systems BUT their agency pays an additional sum into the government retirement system that other agencies are required to pay ~ but they don't. Currently USPS is about $98 billion AHEAD of any possible need ~

[muawiyah]

I have a plan to privatize the USPS.

It should be possible to do that seamlessly as an ESOP ~ however the federal government would lose about 50% of the value added per year to the federal retirement annuity "funds" and would run an even higher deficit.

[Poundstone]

Right on, Muawiyah.

Federal retirement is not a huge issue, even though military retirement does need reform in order to be sustainable. Senators McCain et al have called for transitioning military retirement for new service members to a hybrid pension-401(k) system, similar to the FERS system that covers almost all federal civilian employees.

[muawiyah]

Let me put it this way. I was in the US Army Infantry. I risked my life.

I had a cushy job later on that put me on the streets of downtown America at 2 AM on many occasions. I certainly risked my life there.

I don't think you ever risked your life.

I have no doubt you're the kind of person we wouldn't have let near the trash compactors.

[Our man in washington]

There is one small bright spot in this mess, and you can thank Reagan for it. In 1986, they reformed the Federal pension system and had all incoming employees enroll in a much cheaper system that used mostly a 401(k) type plan. The problem is that everyone who started before 1987 stayed in the old system.

Over time, the percentage of retirees will shift from the old system to the new system, so things should actually be significantly better in 20 years than they are now, from a financial point of view.

[dragnet2]

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis.

[muawiyah]

What we have is a bunch of batardes who weren’t satisfied with short changing us on our pay ~ and in my case my Veterans Re-employment Rights on my return from service ~ they now want to steal our retirements that have already been paid for through enormous interest free loans we made to their government.

[Valpal1]

Currently USPS is about $98 billion AHEAD of any possible need ~

Except, congress spent that money too. USPS has got the same thing as everyone else, empty promises from congress.

[muawiyah]

The statistics left out the pay received by corporate CEOs BTW. You put that in the mix the federales show up woefully behind the private sector.

BTW, they also deleted USPS clerk/carrier pay levels. They're 30% of the federal government employees and they don't make anything near $120,000 per year.

Citing wholly discredited statistical propaganda is beneath you. Don't do it again. We are here waiting on these threads for people to try that trick.