Do You Think States Could Keep the Defined Pension Plan Going? Not Criticizing, Just Asking

[Joel thakkar]

As we all know states like california and illinois have unfunded pension liabilities. What do you think is the future of Defined Pension Plan?

Also i want to know why following idea is wrong (I am assuming it has some flaw as it is not popular)



I think there should be equal pension for all...Can't state govt just have a limit like 50k-60k for something like that...all retired employees get same pension around 50k-60k...so that employees who will have pension below that level can be lifted up...i know...many directors and high level executives working for govt will get their pension reduced but they were already in a high level big salary post...they would definitely have more savings than a junior clerk. Also 50-60k pension is a livable pension i think..the main reason is that pensioners above $100k are increasing...almost every major state like california, nj, etc,,saw their $100k double or quadruple in last few years.


Of course state govt should increase the pension as per inflation from that 50k-60k point.

[tularetom]

1. Don't get me started

Defined benefit pension plans such as CalPERS are unsustainable under the current rules that allow employes to "spike" their earnings in their last year of active employment, throwing everything but the kitchen sink into their salaries, such as overtime, car allowances, unused vacation and sick leave, and god knows what else.

This is how cops and others who earned $75 or $80k in their final year of employment are able to retire on annual allowances of $125,000 after 25 years of service.

I don't know about $60k limit but I see no problem with capping pension allowances at say, 90% of the employee's actual salary for their final year before retirement. Or better yet, 90% of their actual salary for the average of their final three years.

[Lee-Lee]

2. Any pension plan that politicians have their fingers in

Will sooner or later have trouble- the nature of any politician is to focus on the short term, because in the long term they will be gone. So they undertax/underfund and over promise, and everybody is happy- the hurt comes long after they are gone, and they bear no responsibility.

On a related nope, after working in a system with a pension plan, I grew to dislike them. Because they lock a person into one career until they can retire, even if they want to do something else. I saw countless burned out cops just trying to get a couple more years in until they could get the full pension and then they had another job lined up they really wanted to do. But keeping burned out cops on the job isn't good for anyone- the public or their fellow officers. I imagine it happens with teachers and others as well.

[Joel thakkar]

3. Good points

I agree with most of your points but i think we should not withdraw lifetime pension plans just due to that...there are many govt employees who love their work and would definitely like at least confirmed livable pensions (unlike 401k where your money can go with markets falling down). However, we should not neglect the points you made and should find a solution for that too.

[Lee-Lee]

4. I think employees should have a choice at hire

Choose pension and take your chances it will be administered properly, or choose 401k/ other investment you manage yourself and hope you and the market get it right.

Choose on hire, and you stuck after that.

Maximum choice for the worker.

I have a friend who gave up on teaching because she is married to a Coast Guard officer, so they move every 4-5 years. Being forced into pensions in each state meant she could never get vested in any plan.

[sinkingfeeling]

5. Yes, they should honor their promises made to their employees and raise

taxes or refine the rules as necessary. If the states are allowing the 'fudging' of income on which to base the pensions, they need to remedy.