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Thread: OT - Pension Benefits Now and Then

  1. #1

    OT - Pension Benefits Now and Then

    Forty years ago my father passed away just after his 55th birthday, my mother qualified for survivor's benefit pension of $437 a month. My father had been making $28K a year as a facility
    engineer of a paper company at their headquarters. He had been with the company for over 25 years. When she was old enough my mother also got Social Security.

    Thirty five years later my wife passed away, almost 55, she had over 20 years as an environmental engineer with the Navy and was making a little over $90K a year. Last Week the Federal retirement administrators notified me that I was eligible for a survivor's benefit of $401 a month. I am not eligible for Social Security benefits. For my entire career, Presidents from Reagan on had told professionals like me that we didn't deserve comparable salaries because of our generous pensions compared to the private sector. I spent the weekend thinking about how poorly my wife's pension benefit was compared to that of my father's forty years ago at less than a third the salary. It hit home hard to realize that unless you are a member of the warrior class you won't be able to live on your pension, the middle class expectations of the fifties are pretty much dead.

  2. #2
    I just retired in December from a private employer and received a very handsome pension. They still exist. You just need to find the right employer.

  3. #3
    Loyal Bear Strykur's Avatar
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    Quote Originally Posted by 71Bear View Post
    I just retired in December from a private employer and received a very handsome pension. They still exist. You just need to find the right employer.
    Here's a good one:


  4. #4
    Quick question - did your wife select max payout for herself? With mine you can select less but if you die the payments for survivors remains unchanged. If you select max for yourself the survivor payout is a fraction". It's a gamble with the game set by acturarials

  5. #5
    No she died before she was old enough to select payout options for Social Security or FERS. With the FEDS You can select max payout with zero survivor benefits or you can select a reduced pension with 55% survivor benefits. However if you die before you reach your minimum retirement age they deduct 10% for each year under that age.

    PERS was based on the old Federal system, but your employer (state or local government) could accelerate payments into the system to increase benefits. Some local governments allowed 3% per year of employment or military service and the maximum was not limited to 80% of base salary. Plus your pension was based on actual pay not salary grade so you could increase your pension working overtime. AS a result some local government employees retire at more than their base salary.

    Quote Originally Posted by MilleniaBear View Post
    Quick question - did your wife select max payout for herself? With mine you can select less but if you die the payments for survivors remains unchanged. If you select max for yourself the survivor payout is a fraction". It's a gamble with the game set by acturarials

  6. #6
    Quote Originally Posted by sp4149 View Post
    Forty years ago my father passed away just after his 55th birthday, my mother qualified for survivor's benefit pension of $437 a month. My father had been making $28K a year as a facility
    engineer of a paper company at their headquarters. He had been with the company for over 25 years. When she was old enough my mother also got Social Security.

    Thirty five years later my wife passed away, almost 55, she had over 20 years as an environmental engineer with the Navy and was making a little over $90K a year. Last Week the Federal retirement administrators notified me that I was eligible for a survivor's benefit of $401 a month. I am not eligible for Social Security benefits. For my entire career, Presidents from Reagan on had told professionals like me that we didn't deserve comparable salaries because of our generous pensions compared to the private sector. I spent the weekend thinking about how poorly my wife's pension benefit was compared to that of my father's forty years ago at less than a third the salary. It hit home hard to realize that unless you are a member of the warrior class you won't be able to live on your pension, the middle class expectations of the fifties are pretty much dead.
    Pension benefits are worse off now because pensions are a huge financial burden to a company/ organization; it's a huge competitive disadvantage. People are living longer and pensions really put a hindrance in an organization's ability to compete with limited resources.

    While I did work for a company that offered a pension, I have very mixed feelings about pensions and social security overall. Most employees don't have pensions to rely on when they retire; that's where saving for your own retirement (e.g., 401k) come into play.

    I might be in the minority with my feelings, but wanted to offer a different perspective for a healthy conversation.

  7. #7
    Sorry for your loss of a beloved wife. The pension system for the "Warrior class" should be higher imo, but your survivor's pension is shockingly low. My ex-wife died and my kids got over $1,000 per month in survivor's benefits until they were 18 - my daughter for over a decade.
    The whole pension system is really crazy. I worked for the County of Ventura and got a good pension which is solidly financed because it is independent of PERS and run by local people who are largely conservative and responsible. PERS has been a total whore for the Democratic Party and is in great long-term trouble. It will soon go the way of Detroit, but it is not that sexy an issue so it gets little attention.
    The government pension system has all kinds of unfairness as well. It unfairly rewards older, later joiners who usually failed in their first jobs. I know of one guy who went to a Mickey Mouse law school in his forties and stayed in the DA's office like an abalone on a rock doing misdemeanor assignment his whole career and he gets a larger pension than I do although I joined right out of Boalt and I tried a record number of murder cases, ruined my health and had to retire early.
    It is impossible to have a simple but fair pension system imo.
    Last edited by CAL6371; 02-22-2017 at 08:49 AM.

  8. #8
    Quote Originally Posted by travelingbears View Post
    Pension benefits are worse off now because pensions are a huge financial burden to a company/ organization; it's a huge competitive disadvantage. People are living longer and pensions really put a hindrance in an organization's ability to compete with limited resources.

    While I did work for a company that offered a pension, I have very mixed feelings about pensions and social security overall. Most employees don't have pensions to rely on when they retire; that's where saving for your own retirement (e.g., 401k) come into play.

    I might be in the minority with my feelings, but wanted to offer a different perspective for a healthy conversation.
    Instead of a company or state run pension, couldn't employers buy annuities from the private sector for employees that can either be opted in/out by the employee themselves? So instead of getting $X salary per month(as dictated by market rates) you get $(X-annuity premium) per month? And then the employee can choose how much pension then want?

  9. #9
    True Blue Golden Bear 59bear's Avatar
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    Defined pension plans of private employers may still exist but are becoming rarer (and less generous) all the time. I've been retired since the turn of the century. My employer dumped it's defined benefit plan in the early '90s (vested employees got an annuity package) and switched to a 401 option. My wife's deal (a PERS plan) will be better.
    Access is better than ownership!

  10. #10
    The Warrior class of ex veterans in government service is highly compensated and the source of most public pension funding woes. First military experience is rated equal to college degrees and professional licenses when it comes to pay and job placement and then veterans get priority placement for jobs. Veterans in the private sector are not so lucky. But the real financial problem comes when the veteran gets credit for their military service in their pension benefits. A retired vet who served 20 years is an immediate 20 year service employee when he gets a government job, if he works five years and retires again he gets the pension of a 25 year employee but only paid into the system for five years. The pension fund has lost 20years of contributions. Most pension actuarial calculations were based on the employee making contributions for all the years that their benefits are based upon. A high number of government employees are veterans I've seen estimates as high as 39%. Not hard to figure out why government pension funds are in trouble when 2 out of 5 retirees have not contributed their fair share into the system funding.

    AS far as PERS they gave some exceedingly generous buyouts to the public safety employee sector, far in excess of their contributions, so it is not surprising that the fund would would be in trouble. Especially since these employees can retire much earlier than the rest of government employees so their benefits are paid over a much longer period of time.

    Yes I agree that my survivor's pension is shockingly low, If I had been the one who died (I was in the old pension system) her benefits would have been nine times higher even though our salaries were comparable.

    One huge financial advantage for veterans is their free health care for life. We had a good health plan that with medicare costs me a little over $400 a month. But our health plan would not pay for life saving lung surgery for my wife even though the VA offers the same procedure (private insurers review boards or death panels). I have a friend dying of lung cancer who also
    could not get the same surgery from his United Health Care insurance. He's a Vet who has hated the VA since the mid 50s and obviously wouldn't seek treatment if his life depended on going to the VA. Our insurance wouldn't pay for some of the treatments my wife received so we had to cash out 50% of her 401K after the market had crashed and then had to pay significant early withdrawal and income tax penalties. We needed the money for her bills but we ended up getting about 20cents on the dollar compared to the value a year before.
    You don't always get sick when the stock market is high... 100% free health care, even with some delivery problems is a huge financial benefit.



    Quote Originally Posted by CAL6371 View Post
    Sorry for your loss of a beloved wife. The pension system for the "Warrior class" should be higher imo, but your survivor's pension is shockingly low. My ex-wife died and my kids got over $1,000 per month in survivor's benefits until they were 18 - my daughter for over a decade.
    The whole pension system is really crazy. I worked for the County of Ventura and got a good pension which is solidly financed because it is independent of PERS and run by local people who are largely conservative and responsible. PERS has been a total whore for the Democratic Party and is in great long-term trouble. It will soon go the way of Detroit, but it is not that sexy an issue so it gets little attention.
    The government pension system has all kinds of unfairness as well. It unfairly rewards older, later joiners who usually failed in their first jobs. It . I know of one guy who went to a Mickey Mouse law school in his forties and stayed in the DA's office like an abalone on a rock doing misdemeanor assignment his whole career and he gets a larger pension than I do although I joined right out of Boalt and I tried a record number of murder cases, ruined my health and had to retire early.
    It is impossible to have a simple but fair pension system imo.

  11. #11
    What's a pension 🙃

    Don't you get less if your company has a retirement plan because it's considered double-dipping?

  12. #12
    My own pension: rental properties

  13. #13
    Real Bear BeachedBear's Avatar
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    I'm a former pension actuary. I say former - because I saw the obvious trend away from corporate pensions change dramatically in the 90's and 00's. I also spent a lot of my career working with CFOs of medium and large companies. Pensions are based on long-term planning. Most CFOs are driven by very short term reactions. That tension was simply too much to overcome.

  14. #14
    Thanks for the interesting response. You present a very interesting set of facts (many unknown to me).
    Although I was a prosecutor, I do not get a law enforcement pension and was never compensated for overtime (nor should I have been imo).
    I seriously doubt that 39% of public employees are veterans - that is way too high in my experience. Double dipping should be outlawed imo.
    The greatest abuse of public employee pensions are those of firemen. It is rare for a fireman in California to retire without a disability pension. They are the most coddled public servants I have ever seen - paid to sleep, can accumulate huge amounts of overtime pay to raise their pension payout, very few are badly injured in counties like mine, no one shouts abuse at them, they don't get pelted with rocks and garbage by onlookers, no one shoots at them, everyone is glad to see them etc. That is one of the hidden scandals no one discusses.

  15. #15
    Quote Originally Posted by sp4149 View Post
    A retired vet who served 20 years is an immediate 20 year service employee when he gets a government job, if he works five years and retires again he gets the pension of a 25 year employee but only paid into the system for five years. The pension fund has lost 20years of contributions.
    This is one of the big problems (not the only problem) with CALPERS. What should be a federal burden (taking care of vets) has become a local burden. It is hard to say no to the Vets when you start from the premise that WE owe them for their service. It is not just Dems who dug this hole. Why would a pension system give service credit to someone who had not purchased it? In my system we pay 8+% of our salary annually for a year of credit (and it is going up). We don't get a pension for free. Why do veterans? If the country believes that they should, then that Service Credit should be purchased by the Federal Government. For far too long, politicians of all stripes thought their give-aways would be covered by growth in the value of the funds investment portfolio. It isn't working out that way, and cities and counties are being left holding a bag that the Federal Government dumped a bunch of their problems in.




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