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Posted on April 30 at 7:59 a.m.
Pretty much spot-on, OldDawg. There is also a large portion of innumeracy among all employers and politicians, so they are unable to really understand the consequences of 3%@50, or 1.7%@62. They rely on `experts' who are sometimes charlatans or people with their own agendas. You really want someone with a pocket protector and a crew cut, not a shmoozer, to evaluate numerical consequences.
Also, when you start talking about funds with $100's of billions, it is hard for anyone to grasp who little decisions of a few dollars here and there matter.
Private annuities have their own sorry record of charlatans.
In the end, I do lean slightly toward trusting the government oversight... Medicare is the most efficient health insurance arrangement, by far, for example. Wisconsin & South Dakota did well. But Caveat Emptor.
On Colleges Bleed to Death Slowly
Posted on April 29 at 8:11 p.m.
JJ, you'll find that all California systems also have the capability of DC too.
In my case of all-DC, I already agreed that Vanguard is a great option in terms of fees. But no DC in the world addresses the risk of longevity... everyone in a DC plan must save extra just in case they live a long time. In a DB plan, the early mortalities fund the long-lived. DB is simply a more economical solution.
California payouts got upped too much by the usual US greed (the public sector has its share of greed, although really, the private sector has even more greedsters).
Sure, for CalPERS and CalSTRS all kinds of weird add-ons were inserted and the systems got out of control. UCRS is the odd one, that got out of control from the top down... a pension holiday for the employer for nearly 20 years.
Public DB pensions have to simply be kept extremely simple, bare-bones, without all kinds of rococo fluorishes. 1.7% @ 62 seems fine to me, with DC options but no employer matching.
Posted on April 29 at 5:51 p.m.
Wisconsin, see page 2 of: http://etf.wi.gov/publications/et8901...
Wisconsin maximum benefit is 70%, not 50%. Multipliers are listed. No need for the spew, WhizWhiz.
South Dakota has no maximum benefit. A 50-year employee could get 84%.
Well-funded, well-run DB plans in Wisconsin and South Dakota. Repeat that, JizzWhiz, DB plans in Wisconsin and South Dakota are well run, sustainable, and had California's been like those, California would be in great shape.
Posted on April 29 at 4:56 p.m.
Can't just admit openly and honestly: Wisconsin and South Dakota simply have well-run DB plans?
Already it has been pointed out that those plans have a multiplier of about 1.6% per service year @60, much less than the Republican-beloved California safety unions (whose benefits are modeled on the US military) of 3%@50. You are just repeating random snippets.
Of course a combination of SS, DB, and small portion of DC is a good cocktail. That was the whole intention of the 401(k)/IRA system back in the 1970's.
But the origin of the supersized DB pensions, for example in California is.... 1)comparisons with the generous US military pensions, where retirement at 37 is possible, and the benefit is huge because the payout goes on for nearly 50 years on average, 2)comparisons with the exceedingly generous DB plans of US private executives.
I'm happy if 1)military who never served in a hot war on the battlefield have to wait until 62 to collect pensions; 2)any private company that does any business (sales, exploitation of tax credits, etc) with any government agency (local through federal) limits its pension systems to no more than the FICA limiting salary... impose those limits on public sector too.
Posted on April 29 at 4:17 p.m.
JisJizz.... for goodness sakes, Wisconsin and South Dakota have eminently sustainable DB plans, contradicting your nonsense ` the unsustainable and the unforgivable - the D-B public pension'.
But you never let a fact get in the way of your steaming piles of nonsense.
And just because a union long supported by the Republicans says something, doesn't prove it is false. Indeed huge fees for DC plans are their signature, and investment firms are able to charge all sorts of disgusting charges to the fees... like travel, lodging, and extras or their `female companions' taken to the Kentucky Derby.
Yes, there are low-fee DC systems, like Vanguard's. But even using Vanguard for DC plans does not eliminate the higher cost of covering longevity risk.
It certainly is true that Wall Street's actions during the financial crisis exposed the taxpayer to liabilities as high as $24 trillion, according to the Special Inspector General for TARP. The taxpayer floated low or no-interest loans to Wall Street that resulted in losses to the taxpayer of 100's of billions of dollars.
But you never here JizzJizz complain about all that. Those guys are his buddies, and he wants the taxpayer robbed as long as his buddies get the proceeds.
Posted on April 29 at 12:40 p.m.
Close? Yes, I got f**d by the DC industry, and I have every right to make sure others learn how expensive DC retirement is, and how phony calls for exclusive use of DC and elimination of DB is.
Every criminal in our prisons would like the justice system `to get out of the past', and let them free. An illogical argument. The brass of UC messed up and made no contributions for almost 20 years, and they should regularly step up and take credit for their handwork.
How about... if any company takes a cent of government money, through any incentive program, contract, purchase... all their employees (including the top execs) must take part in the plan you propose, with a strict limit on total post-retirement compensation of $100,000.
If you don't want the limits, don't take a penny of government money.
If you want to refer to FICA, you should at least support changing it from a regressive to a flat tax.
Posted on April 29 at 10:49 a.m.
From people I know who work at UCSB, I'd say their hides are getting scraped pretty well, to make up for the mismanagement by the top brass who decided that UC would make 0 contributions between 1991 and 2009.
Never hear you or anyone else in the anti-pension world saying how great it was that a huge amount of money was saved by UC (including from students & the state) between 1991 and 2009.
A large portion of the funding to make up for the innumeracy of the top brass between 1991 and 2009 is coming from substantially increased employee contributions. Not sure how much... 10% of the salary or something.
varJis... you repeatedly fail to point out that private-sector education is vastly more expensive for students than the public-sector. UC is still a bargain even if the innumeracy of UC's top brass has to be paid back in part from tuition.
As for the Social Security FICA, that has a regressive funding mechanism, as I pointed out long ago. People who have salaries >$150,000/year pay a smaller percentage of salary to FICA than I do, and Warren Buffett pays a vanishingly small fraction of is income to FICA. How about making FICA contributions flat across the board?
Otherwise, you keep ignoring the fact that South Dakota and Wisconsin have well-funded DB plans at 1.6% per service year. Why not use their models?
And you never discuss the fact that those in military service can retire at 37. I can understand that for people with combat service & related disability. But otherwise, for office-jockeys in the Pentagon, it makes no sense. And it makes no sense that military pensions are not pre-funded at all. A $trillion debt (if accounted for with GASB rules).
Oh, visJar, you never call for instituting GASB rules for the US Military. Shows again that you love spending public funds wastefully, if your buddies get the funds.
Posted on April 29 at 9:59 a.m.
I'm all in DC plans and was shocked at the horrible performance until I wised up. I had one 401(k) account where the fees ate up all returns between 1990 and 1999. So I realized I had to learn better, now I'm in lower-fee 401(k) but only my rollover IRAs are in a really good place (Vanguard).
``It takes money to run "good D-B plans" as well.''
Name me one retirement option other than death or penury that does not require money, visJar.
DB are the lowest in fees and also win from near-elimination of longevity risk. Unfortunately California plans (like many in the US) got lulled by the concept of stock market returns being smooth and not lumpy, and raised the annual multipliers to unsustainable levels, principally for safety employees, who model their requests on the US Military, where retirement is possible at age 37, and where non of the anti-pension groups focus their scrutiny.
The biggest endorsement of DB: the great majority of private sector executives have amazing plans. Often funded by draining the DB funds for rank & file. Read `The Retirement Heist' by Ellen Schultz.
Posted on April 29 at 5:50 a.m.
varJis, what apples to what apples? Properly applied, GASB criteria would apply to both DC and DB plans, and DC savers would have revealed to them:
1)The inadequacy of their balances2)The much higher cost of DC plans to cover a given retirement income, due to the elimination of longevity risk in DB plans3)The much higher cost of DC plans due to added fees; as much as 5% per year. DB plans reduce fees by pooling.
The propaganda used to justify DC plans completely omits any apples-to-apples evaluation of DC plans relative to DB plans, from the perspective of the retiree.
The solution is modest, well-run DB plans, like those in Wisconsin and South Dakota, which are free of California's debt problems.
Posted on April 28 at 4:41 p.m.
Botany, you should learn someday how to calculate a percent, like anyone who got an education beyond the 3rd grade.
The absolute value is irrelevant, Botany, because gains (and losses) occur on a percentage basis.