Daryll’s assertion was that the COVID money was going to shore up public school teachers’ pensions in Western Pennsylvania, which is incorrect.
Ok, so he was wrong about the state. It was Connecticut and it was their state pension plan. Which includes much more than teachers.
Yet an analysis by the CT Mirror shows that more than six out of every 10 federal relief dollars built into the new state budget that began July 1 effectively will wind up in public-sector pension accounts.
And
“We are at a point where we have options” to substantially improve the pension funds, said Sen. Cathy Osten, D-Sprague, co-chairwoman of the Appropriations Committee. “We have not had options in a long time.”
Not sure why you seem to think that just giving your understanding of what different types of pension plans are available to union employees supports your assertion that public pension plans were bailed out. As you point out, the plans for public employees are run by the state or Federal entity. They are not multi-employer plans run by the unions, which are the plans that were bailed out.
I thought you all were talking about the bail out of unions, I didn’t realize that you were being more specific and targeting only public unions. But still, in Connecticut, they happened to fund them also.
a coronavirus relief package, Texas budget writers are beginning to look at how they might use federal funds for one-time “investments,” such as bolstering pension funds for retired teachers and state workers.
Oct 2021.
Texas Senate passes bill to direct federal relief money to state agencies, hospitals and tourism industry https://www.texastribune.org/2021/10/08/texas-senate-covid-r… About $286 million would head to the Teacher Retirement System of Texas to help cover COVID-related health claims and to ensure that…
Teacher Retirement System (TRS) pension retirees got a one time supplement payment in Jan2022. I’m not seeing anything directly tying this to federal covid dollars.
I thought you all were talking about the bail out of unions, I didn’t realize that you were being more specific and targeting only public unions.
I looked at what the article you supplied said, which was that multi-employer private pension plans were bailed out. You supplied that article in support of Daryll’s assertion that public pensions were being bailed out. All I did was point out that the article said that it was private company pensions that were bailed out, not public pensions.
But still, in Connecticut, they happened to fund them also.
Except in the article that you supplied, it says that the state got $1.8B in relief from the American Rescue Plan Act (ARPA) and that Lamont and the legislature built almost $1.8 billion of ARPA funds directly into the new state budget, and have begun plans to spend the rest on other needs created by the pandemic. So they spent the ARPA money on things that they were supposed to spend them on, and still ended up with a $2.3B surplus (more than the ARPA funds) over the next 2 years. Connecticut law requires that once their state’s rainy-day fund is maxed out, any additional surplus must go to support the pension funds.
And where did they get that surplus? Well, my guess is that at least part of it is coming from the real estate transfer taxes that Connecticut has charged for years. (I paid a transfer tax when I sold my CT house in 1995.) In fact, just in time for the real estate boom, in addition to the 0.75% on the first $800k and 1.25% on anything over $800k, they added a mansion tax of 2.5% on anything over $2.5MM
Some people are never pleased - they complain bitterly when they think governments are spending too much, and then they complain bitterly when governments don’t spend all of their revenue and end up with a surplus and use that surplus as required by law.
Daryll’s assertion was that the COVID money was going to shore up public school teachers’ pensions in Western Pennsylvania, which is incorrect.
This might be more a function of how much gets invested and the generosity of public pension plans. In Western Pennsylvania, the two retired public school teacher couple are the new “millionaires”. And while their pension won’t get passed to heirs, they are generally inflation protected. They don’t have to worry about SWRs and market collapses. And a lot of the borrowed US government Covid money found it’s way to shoring up public pensions.
intercst
Let me clarify. First, I fully fess that I was not able to post a direct citation that Covid money went to shore up public pensions. But thanks to those who did. I knew I read something to that effect. As to Intercst’s quote of me, above, I never said that Covid money went to Western Pennsylvania public pensions. (Although all of that money flowing to the state treasury certainly helps, indirectly.) I was just adding the overall comment that here in Western Pa, two-teacher retiree couples are the new millionaires. That public pensions have become a way to retirement riches for some, while acknowledging that the limitation of this that public pension wealth can’t be passed to heirs. I was just contrasting this alternative way to a fat retirement (versus SWR type retiring often discussed here) and noting the tendency to protect public pensions, with bailouts if needed. While the SWR retiree has to worry about investment returns, inflation, mistakes, etc etc.
Some people are never pleased - they complain bitterly when they think governments are spending too much, and then they complain bitterly when governments don’t spend all of their revenue and end up with a surplus and use that surplus as required by law.
AJ
Many complaining bitterly when governments don’t spend all of their revenue aren’t complaining about not spending it. The complaint is that the money wasn’t needed in the first places and taxes are too high. Cut taxes and give the money back to the producers and investors.
Many complaining bitterly when governments don’t spend all of their revenue aren’t complaining about not spending it. The complaint is that the money wasn’t needed in the first places and taxes are too high. Cut taxes and give the money back to the producers and investors.
But Connecticut is spending their revenue on something that it obligated itself to spend on long ago - unfunded pension liability, much of it from pre-1985 service obligations (which would primarily go to current retirees and those who will be retiring in less than 10 years). The fact that money is fungible doesn’t change the facts that per the article:
their surplus is larger than their ARPA funds;
they put ARPA funds into their budget appropriately; and
surplus in the budget is required by law to first fill their rainy-day fund and then be used to fund pensions
So, I guess that those people complaining bitterly that Connecticut taxes too much would rather that Connecticut stiff it’s pensioners and break their own laws to use their surplus to give refunds of taxes that were already planned to be collected based on their current laws? I would point out that if people don’t like the tax system in Connecticut, they are free to move someplace else like Texas where there isn’t a state income tax, but average sales tax (8.05% vs 6.35%) and property tax (1.81% vs 1.63%) are higher than Connecticut’s. Never mind that, as rainphakir pointed out, Texas is also giving some of their ARPA money to the Teacher Retirement System of Texas and that Texas, like every state, also has large unfunded pension liabilities https://alec.org/wp-content/uploads/2021/06/2020-UAUA_Final_…
So, I guess that those people complaining bitterly that Connecticut taxes too much would rather that Connecticut stiff it’s pensioners and break their own laws to use their surplus to give refunds of taxes that were already planned to be collected based on their current laws? I would point out that if people don’t like the tax system in Connecticut, they are free to move someplace else like Texas where there isn’t a state income tax, but average sales tax (8.05% vs 6.35%) and property tax (1.81% vs 1.63%) are higher than Connecticut’s. Never mind that, as rainphakir pointed out, Texas is also giving some of their ARPA money to the Teacher Retirement System of Texas and that Texas, like every state, also has large unfunded pension liabilities https://alec.org/wp-content/uploads/2021/06/2020-UAUA_Final_……
I prefer that all pensions be honored. Since the final stop will be the government it doesn’t bother me at all that the states use any monies they might have to shore up any obligations. All people with pensions, negotiated those pensions, and they should be held binding.
But, wanting to have all pensions covered, does not mean that I don’t want to know where the money is being spent. These pensions belong to many people and if they fail, those people will be put in a position through no fault of their own. I have a pension through a private company that is backed by an Insurance company which is backed by the full faith of the United States Government. I have nothing to worry about. But if I was a Teacher, or a Police Officer, or a Fire Fighter, I would be careful, very careful of who I was voting for. Many of the people out there are very jealous of your pensions and are pushing elected officials to let your pensions fail. If they fail the U.S Government will cover them but you might not receive the full amount. Anyone that has over 55,000 a year in a pension, will see them cut. (That isn’t an exact number, it’s around there). It is very important to know where your elected officials stand on your pensions.
Also, if you didn’t know, every public pension is posted on line for everyone to see, and expect that when this really heats up to see many populous politicians to use that against you, to get the public worked up.
One of problems with union and state pensions is that many are over-generous. After round and round of negotiations, where unions settled for less increased pay this time, but promised increases in pensions - including generous cost of living increases mandated - is that many retire on fat pensions - and there are ways to even ‘boost’ the pensions further.
It’s amazing that so many sanitation workers in NYC wind up with pensions greater than their last year’s ‘normal salary’. Seems they manage to work 100% overtime hours the last year - (having others log in with their number) - for some cash under the table. That gooses the pension based up the last year’s ‘compensation’. Lots of NYC sanitation workers got $100,000 a year pensions to start - inflation adjusted…after 20-30 years of service.
that and going out on disability within a year or two of retirement…or at age 55…
Oh, and many of those pensions allow you to retire at 55, have paid for health benefits till 65, or ones you can get for $100/mo…
Not your teachers but tons of ‘administrators’ and similar…‘manager types’…
a lot of state budgets will get busted with 7% inflation and mandated COLAs.
One of problems with union and state pensions is that many are over-generous. After round and round of negotiations, where unions settled for less increased pay this time, but promised increases in pensions - including generous cost of living increases mandated - is that many retire on fat pensions - and there are ways to even ‘boost’ the pensions further.
Nothing is mandated it is all negotiated. The most important about that statement is that they gave up pay raises for more on their pensions. It was negotiated and agreed on. But this points to what I am saying. People are jealous of those pensions and what they negotiated and many people will try to get them thrown out just when they are needed the most.
My husband and I both worked for public companies, invested in 401K accounts for 30 years and are 401K millionaires. It’s called dollar cost averaging and basic market returns (index funds)
Really no magic to it, government or not. Just compounding.
Wow that’s some whopping fees! “Corporate” 401K skim was more like 70 bips (0.7%) then once I moved to Vanguard after switching jobs about a tenth of that. Never paid 2%. Or 3%.
Wow that’s some whopping fees! “Corporate” 401K skim was more like 70 bips (0.7%) then once I moved to Vanguard after switching jobs about a tenth of that. Never paid 2%. Or 3%.
There are small-company 401k plans that take 5% per year in fees and expenses. You’d do about as well if you were taking your monthly 401k contribution in cash, and setting it ablaze on your veranda.
The average all-in cost of those fees is 0.45% of the total invested assets, according to a recent analysis of fee data from those who used the 401(k) Fee Analyzer tool.
…
David Blanchett, head of retirement research for Morningstar’s Investment Management group, tells CNBC Make It. The average total plan fees range from 0.37% for the largest plans to 1.42% for the smallest plans, his research found.
There are small-company 401k plans that take 5% per year in fees and expenses
Really? Got link? How common is this really?
You didn’t address this to me, and I don’t have a link, but I can tell you that the OBRA plan in MA, which is a mandatory deferred salary plan for municipal employees, so is much like a 401k, has exorbitant fees. DH is a call fire fighter, so monthly paychecks are all over the place for him and anyone else in the state who may be in a similar situation or work part-time instead of full time. The OBRA plan, by law, can only be invested in money market funds. But apparently they have a minimum monthly fee which, when taken as a percentage of the contribution, has been outrageous. I did a spreadsheet for his contributions from 2013 through 2017 that I sent to my elected officials to try to get this changed so that he could at least choose a real investment. Monthly fees ranged from a low of 1.65% to a high of 39.69%. These worked out to annual expenses of ranging from 2.5% up to 9.5%.
I understand that this is because they have minimum fees, but even the low of 2.5% annual expenses is insane for something that, by law, has to be invested in a Money Market account.
The kicker is that the name of this plan is the MA Deferred Compensation SMART plan, and it is administered by these guys https://www.empower.com/
I’d say these guys had one heck of a lobbyist to be able to get away with this.
Fortunately, DH will be 65 this year, and so has to retire from the FD. I can tell you that we will be rolling that plan over to his IRA so fast it’s going to make their head spin.
And to think people rant here about the .75% that we pay a Financial Advisor. That’s peanuts compared to these OBRA rates.
