Posted on 02/25/2011 9:30:19 PM PST by Outlaw Woman
Add another one to the list of Wisconsin myths: Over at Forbes.com, Rick Ungar has posted a piece that purports to show that Gov. Scott Walker is lying about how government-employee pensions are funded in Wisconsin. His thesis, drawing on this piece by David Cay Johnston, is that Wisconsin state employees participate in a deferred-compensation program, whereby they set aside their own money and the government matches it:
The pension plan is the direct result of deferred compensation — money that employees would have been paid as cash salary but choose, instead, to have placed in the state operated pension fund where the money can be professionally invested (at a lower cost of management) for the future.
His conclusion, therefore, is that 100 percent of the pension benefits currently received by state- and local-government employees is borne by the employees themselves:
If the Wisconsin governor and state legislature were to be honest, they would correctly frame this issue. They are not, in fact, asking state employees to make a larger contribution to their pension and benefits programs as that would not be possible — the employees are already paying 100% of the contributions.
What they are actually asking is that the employees take a pay cut.
Unfortunately, his “smoking gun” is ...
(Excerpt) Read more at nationalreview.com ...
NOTE: There are 'active' links in the article itself; I'm not up to speed on including 'hot links' in a posted article. Sorry about that.
bttt
Thank you.
Why Forbes would let such rubbish make it past an editor is a mystery.
Oh, it's Friday night. The editors are probably drunk by now. Dumbasses.
Thanks. Forbes should be ashamed.
Suppose you give your kid a $10 a week allowance, but all the other kids get $20. The fact that your kid “accepts” $10 doesn’t make him a breadwinner. Every dime paid to a public employee comes from tax (or fee) payers.
So what they are saying is that the teachers are actually making $90,000 per year and are choosing to take their “own” money and put it in retirement? So, to me, that makes it even worse. We are paying them 90 grand a year?...and we’re supposed to believe that they are worth it?
This argument is fundamentally flawed. Public employees in most plans are receiving large amounts of surplus deferred compensation beyond the accumulated value of contributions (employee/employer) plus a risk adjusted rate of interest. The surplus deferred compensation is essentially the difference between account balances (similar to valuations with cash balance pensions) and the present discounted value of the retirement benefits (measured by the amount to purchase private sector annuity with the same benefit stream). In my two studies of Colorado retirees, the average surplus deferred compensation was equivalent to a lump sum payment of $520,000 to supplement their account balance. This lump sum payment is equivalent to 25 to 35 percent additional compensation per year.
The situation is much worse than it appears because of the ability for higher paid employees to spike their pensions. I found plenty of evidence of egregious pension spiking in my studies. The most ridiculous example was a university administrator who retired at age 50 with a pension valued atn more than $6 million against an account balance of $1.3 million. This administrator received large salary increases ($75,000) over the last 5 years of employment despite everyone being aware of her pending retirement.
The Forbe’s article was nothing more than an attempted ‘hit’ on Gov Walker. Unger is full of crap and sounds like an absolute idiot in his so-called reasoning.
What a drone
yw
One is Retriemnt the other is defered income.
See:
PUBLIC EMPLOYEE TRUST FUND 40.85
40.81 Deferred compensation plan authorization.
(1) An employer other than the state or the University of Wisconsin Hospitals and Clinics Authority may provide for its employees the deferred compensation plan established under s. 40.80. Any employer, including this state and the University of Wisconsin Hospitals and Clinics Authority, who makes the plan under s. 40.80 available to any of its employees shall make it available to all of its employees under procedures established by the department under this subchapter.
(2) Any local government employer, or 2 or more employers acting jointly, may also elect under procedures established by the employer or employers to contract directly with a deferred compensation plan provider to administer a deferred compensation plan or to manage any compensation deferred under the plan and may also provide a plan under section 403 (b) of the internal revenue code under procedures established by the local government employer or employers.
(3) Any action taken under this section shall apply to employees covered by a collective bargaining agreement under subch. IV, V, or VI of ch. 111.
History: 1981 c. 187, 391; 1983 a. 290; 1991 a. 39; 1995 a. 27; 2009 a. 28.
Just unbelievable. I had no idea it was this bad. The whole situation has been an education.
Being in the private sector only, and for only small companies, pension plans were unheard of until the 401K became popular.
Now I’m extremely curious about Missouri’s ‘public’ employees. There’s a rally in the state capitol tomorrow but I don’t anticipate anything like WI (at this time).
Can you believe this corruption of lies?
Do a little online research to discover what kinds of benefits Missouri employees have. It might be a real eye opener.
Teachers are paid with TAX DOLLARS.
The money withheld from their checks for retirement, etc. is TAX DOLLARS.
The matching funds are TAX DOLLARS.
As a comparison, the federal employee retirement system is based on a contribution equal to 30% of the employee's wages. The employee puts in 3% and the government puts in 27%.
The point of this isn't to show how expensive federal employees are (no argument there) but rather to compare the payout to some state and local employees.
For that retirement contribution FERS provides the following formula. For regular employees you get 1% of average of highest three years multiplied by the number of years worked. So somebody that worked for 40 years would get forty percent of the average of their highest three years. Law enforcement has a slightly higher rate of return and a mandatory retirement age.
Compare that to some state and local employees that retire to 90% of wages or spike their retirement with an overtime sprint and you can see what a bind these states are going to be in. 30% of wages isn't going to come close to covering the costs.
No..it's been a shock. These past 2+ years have been a real eye opener on many many things. This one just being the latest. The "truth" always, always finds a way though.
Good idea
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