Author’s Note: The original title of this post was “CalSTRS CEO Jack Ehnes Recommends 50% Increase to CalSTRS Pension Benefits.” That was inaccurate. What Ehne’s specifically recommended per the quote immediately below this note was “income replacement of 80 percent to 90 percent to maintain a similar lifestyle in retirement,” in reference to his assertion that presently “the median CalSTRS pension replaced less than 60 percent of final salary for the members who retired last year.” To be perfectly accurate, Ehnes’ is recommending a 50% increase in CalSTRS participant retirement income. While he does not specifically recommend increasing their pension benefit by 50%, in order for teachers to achieve a 50% increase in their retirement income, either some other employer paid form of compensation would have to increase – for example, supplemental 401Ks, fed by either greater teacher salaries or greater employer matching, or both, or something else – or teachers would have to live more frugally in order to save more retirement funds on their own without an increase to compensation. Which is it? While this note constitutes a retraction of the original title, and the author apologizes for the misconceptions that resulted, it is still necessary to wonder why pension fund executives are suggesting that 60% income replacement for a public servant is inadequate, when private citizens may consider themselves extraordinarily lucky to secure a retirement income anywhere close to that amount.

“The median CalSTRS pension replaced less than 60 percent of final salary for the members who retired last year. CalSTRS recommends income replacement of 80 percent to 90 percent to maintain a similar lifestyle in retirement. Public educators do not receive Social Security benefits for their CalSTRS service.”
– Jack Ehnes, Chief Executive Officer, CalSTRS, Introduction to CalSTRS Comprehensive Annual Financial Report 2014, page 11)

Here we go again – a recommendation for another 50% pension benefit increase. Will it be retroactive this time? That went well last time. Remember SB 400, quietly passed for CHP officers during a robust bull market in 1999, and by 2005 rolled out to nearly every state/local agency in California? No consequences whatsoever.

And, here we go again – somehow getting a CalSTRS pension instead of Social Security is a monstrous sacrifice!

Social Security recipients making roughly what veteran teachers make can expect to receive a benefit at age 68 that is roughly equivalent to 25% of their final year’s earnings. Twenty-five percent. The average teacher receives 2.5 times that much each year via their pension, starting about seven years earlier. Mr. Ehnes thinks that’s not enough. He ought to know better. If every Californian retiree got a pension equivalent to what a CalSTRS recipient currently gets, it would cost over $600 billion per year. Where’s that money going to come from, Mr. Ehnes?

There’s a lot to chew on for anyone trying to wade through CalSTRS most recent publicly available annual financial report. This additional gem, also coming from Mr. Ehnes himself, illustrates just how out of touch the pension bureaucrats have become:

“The funding approach in AB 1469 is predicated on the actuarial assumption that CalSTRS will earn a 7.5 percent annual rate of return throughout the life of the plan.” (CalSTRS 2014 CAFR, page 8)

Jack Ehnes is referring to California Assembly Bill 1469, passed in May 2014, which will phase in massive contribution rate increases over the next several years, mostly from taxpayers, so that CalSTRS will be fully funded by around 2047. That is, in exchange for even higher contributions from taxpayers, CalSTRS will get its financial house in order “in about 32 years.”

But what if “throughout the life of the plan,” CalSTRS is unable to earn a 7.5 percent annual rate of return? Does it matter at all that recently reported gains were logged during this latest bull market that’s running out of steam? Will even more massive contribution rate increases be the solution? According to the most recent data available, CalPERS is currently $73 billion in the hole, or only 67% funded. (CalSTRS 2014 CAFR, page 158)

The problem with seasoned financial professionals like Jack Ehnes fostering expectations like this – bull market returns of 7.5% for the next 32 years, and pensions for teachers that need to elevate from the current 60% of salary to “80 per cent to 90 percent” of salary, is that people who aren’t financial professionals actually believe them.

From professional government union supported PR firms, to the rank-and-file workers they assist to prepare op-eds, unrealistic expectations from people like Jack Ehnes are packaged into propaganda designed to destroy public support for pension reform.

For an example of this, look no further than the August 22 guest op-ed in the Sacramento Bee, “Another View: State pension funds are recovering,” purportedly written by Lydia Petitjean, a public school secretary and CSEA union official. Pettijean’s lead sentence is pure propaganda:

“Perhaps an oil slick is clouding the crystal ball of Stephen Eide of the Koch brothers-funded Manhattan Institute when he suggests that the effort to undermine the retirement security of millions of Californians – disguised as ‘pension reform’ – is gaining steam.”

This is sophomoric trash talk. It is vacuous, cynical drivel. The Manhattan Institute is a respected organization, Stephen Eide is a policy analyst with unimpeachable integrity and proven financial acumen, the Koch Bros have little if anything to do with the Manhattan Institute, and “oil slicks” is an image calculated to elicit disgust, but has nothing to do with pension reform. Nothing.

Anti-reformers like Lydia Petitjean base much of their rhetoric on a false premise – that big moneyed “Wall Street” special interests would like get their hands on all that pension money. This is patently false. As it is, the finance industry benefits immensely from government pension funds, because they have an enormous amount of money already invested on Wall Street – $4.0 trillion in assets nationwide. The pension funds relentlessly advocate, and then manage, benefit plans so generous that they are forced to invest in high-risk, high-return financial instruments that the financial industry is all to happy to invent and sell to them. Even better, when they don’t hit their numbers, the taxpayers bail them out. And even if every government worker’s defined benefit plan was converted to a 401K tomorrow, the same pension systems, CalSTRS and CalPERS and all the rest, would still be the administrators.

There’s nothing there, Ms. Petitjean. Not even “oil slicks.”

The reality is maybe pension reformers just want to prevent the pension systems and their government union allies from running every city and county in California into the ground.

Sooner or later, if public employees hope to keep their defined benefit pensions, they will have to accept lower benefit formulas. When the next market downturn hits, and it will, people like Jack Ehnes will have a lot of explaining to do, and people like Lydia Petitjean will have to make a tough decision:

Do they want to become oppressors of the private sector taxpayer in partnership with some of the most aggressive financial predators in the world, so they can enjoy retirement benefits several times better than Social Security recipients? Or do they want to share the same economic challenges as the people they supposedly serve, and work towards feasible solutions to retirement security in America for everyone?

*   *   *

Ed Ring is the executive director of the California Policy Center.

CALIFORNIA POLICY CENTER PENSION STUDIES

California City Pension Burdens, February 2015

Estimating America’s Total Unfunded State and Local Government Pension Liability, September 2014

Evaluating Total Unfunded Public Employee Retirement Liabilities in 20 California Counties, May 2014

Evaluating Public Safety Pensions in California, April 25, 2014

How Much Do CalSTRS Retirees Really Make?, March 2014

Comparing CalSTRS Pensions to Social Security Retirement Benefits, February 27, 2014

How Much Do CalPERS Retirees Really Make?, February 2014

Sonoma County’s Pension Crisis – Analysis and Recommendations, January 2014

Are Annual Contributions Into CalSTRS Adequate?, November 2013

Are Annual Contributions Into Orange County’s Employee Pension Plan Adequate?, August 2013

A Method to Estimate the Pension Contribution and Pension Liability for Your City or County, July 2013

Moody’s Final Adopted Adjustments of Government Pension Data, June 2013

How Lower Earnings Will Impact California’s Total Unfunded Pension Liability, February 2013

The Impact of Moody’s Proposed Changes in Analyzing Government Pension Data, January 2013

A Pension Analysis Tool for Everyone, April 2012

78 Responses to CalSTRS CEO Jack Ehnes Recommends 50% Increase to CalSTRS Retirement Income

  1. Robert Fellner says:

    Great post, Ed.

    The CalSTRS CEO also neglects to mention that their 60% replacement rate accompanied a median years of service of less than 25.

    I know public safety unions claim it’s heresy to suggest a career longer than 25 years, but is a full-career for teachers now to be defined as less than 25 years too? Or would it be reasonable to define a full teaching career at 35 years?

    Eg. a teacher begins their career at the age of 25 and retires at the age of 60.

    For full-career teachers, the median CalSTRS pension provided an income replacement rate of 93%.

    • S Moderation Douglas says:

      Great post, Robert.

    • Captain says:

      Robert & Ed, Mr. Ehnes also failed to mention that CalSTRS retiree’s are also eligible for monthly bonuses of 500 dollars based on what’s loosely called longevity. And two percent of their eight percent CalSTRS contribution (25%), for the years from 2002-2012, have been diverted to a cash balance account – which pays a guaranteed minimum return (who gets that?). So the claim they’ve been paying eight percent is false, at least for that time frame/decade. And of course the longevity bonuses, as well as the diversion of their own fair share of employee contributions – to a separate account which guarantees a minimum return, on top of the their CalSTRS guaranteed minimum return which they haven’t fully contributed to, is not accounted for in Mr. Ehnes claims.

      My understanding of how the CalSTRS version of SB400 works is CalSTRS members continued to contribute their 8% contribution rate – but two percent of that contribution rate (25%) was diverted to a what’s called a “Cash Balance Account.“ That created a separate savings account in addition to their pension & longevity bonuses (did Jack Ehnes mention that?). They reduced their contribution rate 25% and are now asking taxpayers to fund both the difference and the “NEW ADDITIONAL” guarantee – while ignoring the fact that CalSTRS themselves took what should be considered a taxpayer reserve and converted those dollars into member benefits – completely wiping out reserves taxpayer have contributed over decades meant to cover costs in a downturn. And now taxpayers are being TOLD they must pay – even though CalSTRS members continue to receive benefits (longevity bonuses & Cash Balance subsidies) that were never a part of the original deal.

      Why it is beyond wrong: the separate Cash Balance Account allows members to receive 4% returns even if CalSTRS loses 10%, and if CalSTRS returns 15% the members would receive that. And they still receive the longevity bonus’s monthly throughout their retirement years.

      Mr. Ehnes should have known better than to use median numbers when he knows full well the median numbers do NOT represent pension payouts for career teachers. There are thousands of dollars in perks/benefits NOT included in the pension numbers. He knows that.

      Where I live we have a P.E. teacher making 117K, with a full pension to follow.

  2. Anon Enigma says:

    Do you really believe that was what Mr. Ehnes said? Work on your reading skills! He’s not advocating an increase in the CalSTRS pension. He’s recommending that CalSTRS members find additional sources of retirement income, such as saving in 403(b) and 457(b) retirement plans (to which employers do not contribute) so that they will have 80-90% of their income replaced instead of the 60% CalSTRS provides.

    Mr. Fellner’s comment is also misleading. To achieve a 93% CalSTRS pension, a teacher would have had to work for 38.75 years. Is that what is generally understood by “full career”? A 30-year teacher would earn a 72% pension.

    Sorry your educations didn’t work out well for you.

    • Robert Fellner says:

      Thank you for proving my point: CalSTRS citing a 60% replacement rate is misleading.

      Private employees are not able to receive a 93% replacement rate after 38 years, which is very much a typical full career for private workers, most who work until 65 or even later.

      25 to 63 is not an atypical full career as you claim, for private sector workers anyway.

      Even if it was, the 60% rate for 25 and the 93% replacement rate for 38, both dwarf what the taxpayers paying for CalSTRS receive themselves.

      • S Moderation Douglas says:

        “private workers, most who work until 65 or even later.”?

        Kind of hard to keep track, especially with all the recent economic turmoil, but Gallup says the average retirement age is 62, which, as I recall, is the median retirement age for teachers.

        Or was. There’s a good chance both those figures will increase.
        In 1991, according to Gallup, average retirement age was 57.

        http://www.gallup.com/poll/182939/americans-settling-older-retirement-age.aspx

        • S Moderation Douglas is Wrong Again says:

          Wrong again. The mean retirement age for CalSTRS is 57. The “average” retirement age for SS is 62 only because they include the disability, which CalSTRS does not. If you take disability retirements out of SS the average SS retirement age is 66. Try to stop spinning your bogus data.

        • Robert Fellner says:

          the 60% rate for 25 and the 93% replacement rate for 38, both dwarf what the taxpayers paying for CalSTRS receive themselves.

    • S Moderation Douglas is Wrong Again says:

      He’s recommending that CalSTRS members find additional sources of retirement income, such as saving in 403(b) and 457(b) retirement plans (to which employers do not contribute) so that they will have 80-90% of their income replaced instead of the 60% CalSTRS provides.
      Ehnes does not mention 403(b) and 457(b) retirement plans anywhere, so he could indeed mean he wants to jack CalSTRS pensions by 50%.

      Considering CalSTRS is already in a “death spiral” that would not be advisable.

  3. S Moderation Douglas says:

    Thank you, Anon.

    Had I not read your post, I wouldn’t have read the source of this rumor.

    And I have long been a skeptic of Ed Ring and his whole organization.

    Good catch. It is painfully obvious that your interpretation is correct, but this headline is now firmly embedded in the Web and all its search engines.

    Resistance is futile. You will be assimilated.

  4. Equal Time says:

    The Manhattan Institute is respected only by those like Union Watch and its parent the California Policy Center that advocate cutting the pay and benefits of public sector employees and retirees. It is a well known unfair and unbalanced organization funded in part by the Arnolds to produce a product. For a full exposure of all the so-called think tanks that are a web throughout the USA, try reading this – http://ourfuture.org/20120813/discover-the-network-out-to-crush-our-public-workers. And Anon Enigma is correct, you are putting words in the mouth of the CalSTRS CEO in order for you to have something to write about. Makes one wonder if that is the best you have. How is the retirement model you and your web mates advocate, the 401(K), doing today? Time for another secret meeting in Sacramento to plot a new strategy to defang unions.

    • S Moderation Douglas is Wrong Again says:

      Everyone, outside of trough feeder land, want to cut the pay of our over fed, fat, lazy, incompetent pubic employees, not just Ed and the various think tanks of unimpeachable character he cites to.

    • S Moderation Douglas is Wrong Again says:

      Oh I love it, some left wingnut yahoo claims a respected think tank is “biased” (how many times are the trough feeders going to use this “talking point”) and then quotes a left wingnut bought and paid for website!!!!

      Love it!

  5. S Moderation Douglas says:

    It would be a real class move if Unionwatch issued a correction and apology BEFORE Jack Ehnes is forced to defend himself in the press, for something he never said.

    Anon Enigma is my new hero. (Don’t worry, there is no stalking involved.)

  6. Tough Love says:

    Ed, The exact quote from your Linked CalSTIRS CAFR is:

    “The median CalSTRS pension replaced less than 60 percent of final salary for the members who retired last year. CalSTRS recommends income replacement of 80 percent to 90 percent to maintain a similar lifestyle in retirement. Public educators do not receive Social Security benefits for their CalSTRS service. Moreover, due to the federal Government Pension Offset and Windfall Elimination Provision, retirees often
    have their Social Security benefits reduced when receiving a CalSTRS benefit.”

    I’m a STRONG advocate for Public pension reform (i.e., calling for a minimum of a 50% reduction in FUTURE Service accrual rates for all CURRENT workers) but I don’t see a “recommendation” for an increase to 80%-90% replacement ratios via increased in CalPERS pensions. Personally, I think that in the current environment he would be nuts to even hint at that.

    That said, his comment about Social Security “reductions” is disingenuous, because anyone EDUCATED on the RATIONALE for these provisions understands that their PURPOSE is to ELIMINATE an unjust “ADVANTAGE”.

  7. john m. moore says:

    In spite of the personal “shots” (above) defined pension plans that assume a 7.5% income rate without a lid on compensable income will and do go broke. Always. Why? Because the actuaries do not estimate for market crashes like 2001, 2008 and now 2015. The pension bond adoptions were primarily the result of the 2001 market crash, not the 2008-9 crash.
    BTW, objective finance and pension experts(Warren Buffett) estimate that a reasonable income rate is about 3.75%. If true, defined benefit plans need twice the assets to pay promised benefits(PVB).

    Also, to correctly estimate pension deficits, pension bond principal must be included.

    The reason that pension reformers do not make any progress is because they are discussing criminal activity-like the 2002-to date pension embezzlements of Marin Co., Sonoma Co., Oakland, San Jose, Pacif Grove, Bell et al-without utilizing embezzlement analysis. You ask, why no indictments: the evidence is that the govt attorney’s were and are part of the criminal conspiracy. What evidence? Just review the Co. of Marin grand jury report identifying the pension embezzlements and then read the legal responses purchased by the government agencies legislators. The opinions are criminal: legal heresy! The State Bar? They are in CaLPERS! ETC. ETC. How about the Board of Administration of CaLPERS-its lies and the liars have all been identified, but the system says “so what,” so it just goes on lying. Softies like Chuch Reed et al are not going to bring us justice.

    Elect honest pension reformers to local legislative bodies: that is THE final and only solution.

  8. S Moderation Douglas says:

    “CalSTRS CEO Jack Ehnes Recommends 50% Increase to CalSTRS Pension Benefits”

    Obviously incorrect
    ………………..
    “Here we go again – a recommendation for another 50% pension benefit increase. Will it be retroactive this time?”

    Stirring up the troops? You KNOW it can’t be retroactive. And, SB400 was NOT a 50% benefit increase.
    ………………….
    “And, here we go again – somehow getting a CalSTRS pension instead of Social Security is a monstrous sacrifice!”

    Hyperbole, Ed, nobody ever said that, and you know it.
    ………………….
    One
    Two
    Three

    Yep, that’s a hat trick.

    • john m. moore says:

      A raise from 2%@50 to 3%@50 is a 50% increase(more if you count retroactivity. It is 1/3 of the pension sum.

      But again, it is all BS. The DB system is criminal and financially a pyramid scheme. So how do we fix it?

  9. 4theplanner says:

    The article needs to point out that monthly payroll deduction is significantly higher under CalSTRS than it is under Social Security. This major difference is the primary reason that benefits are not comparable. I think teachers contribute 3% more per month toward retirement than SS. That really adds up over a working career. Also the CalSTRS system rewards those who set steady in the boat while in the private sector workers don’t benefit going from one job to the next.

    • S Moderation Douglas is Wrong Again says:

      The article needs to point out that monthly payroll deduction is significantly higher under CalSTRS than it is under Social Security.
      Until last year, for decades, the payroll deduction for teachers was 8% of payroll, 8.25% for the district and 2% from the state. The payroll deduction for SS and medical is 7.65%. The difference is less than 10%.

      • ceteris paribus says:

        State and local government employees hired (or rehired) after March 31, 1986, are subject to mandatory Medicare coverage.
        They do pay the 1.45% medicare tax.

        The difference is 29%

  10. S Moderation Douglas says:

    “Public educators do not receive Social Security benefits for their CalSTRS service. Moreover, due to the federal Government Pension Offset and Windfall Elimination Provision, retirees often have their Social Security benefits reduced when receiving a CalSTRS beneft.”

    Nothing disingenuous there, TL. It’s a simple statement of fact any financial planner should discuss in regards to augmenting their pension.

    Also, Ed, there is nothing in that simple statement implying “a monstrous sacrifice!”

    Hyperbole.

    (Hmmm. Very interesting. As soon as hit the space bar after “monstrous sacrifice! ” the word suggestion feature on my Samsung phone came up “Hyperbole” Who am I to disagree?

    ……………..
    For what it’s worth, the final sentence in that paragraph:

    “Most retired educators also do not have employer-funded health insurance after age 65.”

  11. S Moderation Douglas says:

    John,

    If a safety worker retires AT age 50; it is true. His pension will be 50% higher.

    Not many retire at that age, because they typically don’t have their 30 years in yet.

    2%@50 is a graduated formula. It increases incrementally to 2.7%@57.

    3%@50 is not graduated. At age 57, it is still 3%

    A safety worker retiring at age 57 with 34 years service will get exactly the same pension under either formula. Not a 50% increase; not nothin’.

    For all of us outside safety, there was never anything near a 50% increase. At age 63 with 37 years, my increase was about 3%

    • S Moderation Douglas is Wrong Again says:

      Not many retire at that age, because they typically don’t have their 30 years in yet.

      They CAN “retire” at that age if they want to, which you fail to grasp. They may or may not have 30 years in, but it is possible and some do. But many “retire” at age 50 with 27, 28 or 29 year years which is still over 80%.

    • S Moderation Douglas is Wrong Again says:

      A safety worker retiring at age 57 with 34 years service will get exactly the same pension under either formula.
      And WHY on earth would ANY worker work PAST their MAX retirement amount, like 34 years, when the max is 30 years????

      Your spin never fails to amaze us.

      • S Moderation Douglas says:

        You are too cute for words.

        First, the “max” is not 30.

        Second, if you are still healthy, and just got a promotion, or expect a cost of living increase, would you prefer 90% of $80,000, or 90% of $90,000?

        Third, TransparentCalifornia must be good for SOMETHING, search “police” in the pension side, and sort by decreasing “years of service”.

        Why would anyone work 47 years?

        Perhaps that spinning is all in your head.

        • S Moderation Douglas is Wrong Again says:

          30 years, @90%, is the MAX for a 3%@50 safety retirement. So, knowing math is not your forte, why would one work 34 years when they can get MORE by retiring at 90% of salary at year 30, and be at 102% (3% COLA)of salary four years later while NOT working? Not to mention they could “double dip” and make double…

  12. 4theplanner says:

    S Mod is correct about GPO and WEP. Most teachers who thought they would qualify for SS for working in the private sector actually get nothing. This was harmful to many mid career scientists who were cut off when the cold war ended and sought teaching jobs as an alternative. Their 20 years of science work ended up giving them nothing and they now rely solely on CalSTRS pension with say 20 years or roughly 40% of their final paycheck. How’s that for a kick in the pants!

    • Tough Love says:

      Quoting …” This was harmful …”

      Harmful? Only if you consider NOT allowing someone to gain an unjust ADVANTAGE that others do not have.

      STOPPING the ability to gain such ADVANTAGE is the SSA rationale for the WEP and GPO provisions. There full disclosure with the reasons for these provisions on the SSA website.

      Anyone arguing that they were PENALIZED is simply being greedy.

  13. Ed Ring says:

    When reviewing the CalSTRS CAFR, Mr. Ehne’s remarks in particular, it wasn’t immediately clear that he was not advocating a further increase to the CalSTRS pension benefit to achieve “income replacement of 80 percent to 90 percent.” Upon further review, it appears unlikely that was the intent of his remarks. I apologize for probably misinterpreting his remarks.

    The difficulty with being entirely accurate when reading anything coming from a pension bureaucrat, a government union official, or any of their puppets, is that nothing surprises us anymore.

    Why is Ehnes even talking about an “80 percent to 90 percent” income retention in retirement, when private sector workers are forced to pay into Social Security – contributing 12.4% of an independent contractor’s gross income, in exchange for only 25% of their final salary? Teachers, even under the new rules, will NOT be contributing anywhere close to 12.4% of their salary via withholding, as independent contractors must with their total earnings. CalSTRS withholding contributions are moving, in general, from around 8.25% to 10.25% – correct me if I’m wrong.

    Using normal investment assumptions, the differential, by the way, between a salaried private employee’s 6.2% withholding and a teacher’s 8.25% withholding does NOT translate into a retirement annuity that is 2.5 times greater and is awarded 6 years sooner – read this to see the calculations:
    http://californiapolicycenter.org/comparing-calstrs-to-social-security/

    Why does Ehne’s think it is the business of CalSTRS to facilitate income replacement of “80 percent to 90% percent” of final salary when his remarks will be correctly interpreted to justify agitation for higher teacher pay, presumably so they can save more on their own, when the greater problem of private sector taxpayer’s retirement security remains ignored?

    And as an aside – why is teacher pay entirely decoupled from teacher performance?

    And since when should anyone be required to collect more than 60% of their “final salary” in retirement? In the real world, we pay off our home mortgage, eliminate other debt, and live reasonably well if we’re lucky enough to still collect 60% of our “final salary.”

    Why is Ehne’s even talking about “final salary” when in the Social Security benefit formulas, lifetime average salary is what governs benefit accrual, as it should?

    When are people like Ehnes going to understand that 7.5% returns are not “risk free,” and if they are “risk free,” maybe taxpayers should not have to bail out the pension funds anymore to keep them adequately funded.

    These realities are insulting. The mentality of anti-reformers is insulting. Their sense of entitlement is insulting. Their complete lack of empathy for private sector taxpayers is insulting. Their selective understanding of economics and finance is insulting. Their blithe, continual use of distortions, deceit, lies and misrepresentations is insulting. We don’t want to be like them, and we’re not.

    Another aside: Our organization does not advocate eliminating defined benefits, unlike many reformers. We advocate lowering the rate of return assumption, raising the retirement age, lowering the annual accrual multiple, increasing the employee contributions, establishing benefit ceilings, and ending the risky investment strategies. Some of this is consistent with incremental progress already made – but what’s been done so far is not nearly enough. We also believe all public employees should be participants in Social Security. The progressive nature of Social Security benefit formulas, wherein high income participants get less back as a percent of lifetime earnings than low income participants, means that the highly paid public employees would financially rescue Social Security. Let’s do that tomorrow.

    I apologize for misinterpreting Jack Ehne’s remarks – which it appears I did.

    The many anti-reformers who pounced on my remarks this time are invited to find any additional mistakes in my work, or the work of this center. You may find another one or two, among the many thousands of posts and studies we’ve published, because there is no media source or research institution, anywhere, that is infallible. But mistakes we make are not intentional. When we work with our researchers, we urge them to use assumptions that are as conservative and defensible as possible. There is no need to spin the numbers or the explanations of what they mean.

    Overly generous, financially unsustainable public sector pensions are the biggest financial betrayal by government of the average private citizen in the last fifty years. They undermine the very legitimacy of government, as state and local agencies everywhere pass onerous laws and regulations designed to raise revenue at all costs. As they are, public sector pension funds are not financially sustainable. They are going to wreak havoc.

    In the title of this post I have probably misinterpreted Jack Ehnes’ remark, and I am sorry. But I stand by every other word.

    • S Moderation Douglas says:

      A left handed apology from a right wing “educational foundation”?

      • Ed Ring says:

        S Moderation Douglas – notwithstanding the huge ambiguity in the terms “right wing” and “left wing” nowadays, we believe the issues we focus on – fiscal responsibility and quality education – are issues that should concern everyone.

    • Equal Time says:

      You would have been ahead to stop after your first paragraph. Admit a mistake and that is that. After all, we have all shot ourself in the foot from time to time too. Or, you could even claim it was a purposeful misrepresentation just to pull the chain of some of us and see how we would react. The rest of the message reads as an angry tirade of someone justifying their actions because they choose to play the role of insulted victim. I suggest you go grab a beer and chill for a while. As an aside, some day I would like to hear your concept of how to move forward with retirement security for everyone as mentioned at the end of your post/article.

      • S Moderation Douglas is Wrong Again says:

        After all, we have all shot ourself in the foot from time to time too.

        You shoot yourself in the foot every 30 seconds though….

    • Tough Love says:

      Quoting Ed Ring ….

      “These realities are insulting. The mentality of anti-reformers is insulting. Their sense of entitlement is insulting. Their complete lack of empathy for private sector taxpayers is insulting. Their selective understanding of economics and finance is insulting. Their blithe, continual use of distortions, deceit, lies and misrepresentations is insulting. We don’t want to be like them, and we’re not.”

      NOW you’re talking.

      Well Said !

    • Anon Enigma says:

      Still wrong. You cannot compare teachers and independent contractors paying the self-employment tax. Teachers are employees.

      Higher contributions under pension reform are being phased in, but CalSTRS members are paying 9.2% of salary this year with their employers paying 10.73% and the state paying 4.891% – a total of 24.821%.

      In 2016-17, CalSTRS members will pay 10.25% of salary with their employers paying 12.58% and the state paying 6.328% – a total of 29.158%.

      At the top, in 2021, CalSTRS members will pay 10.25% of salary with their employers paying 19.1% and the state paying 6.328% – a total of 35.678%.

      Please don’t guess about numbers when actual numbers can be found so easily. Intellectual integrity matters!

      • Ed Ring says:

        Anon Enigma – of course you can compare teachers and independent contractors paying self-employment tax. Approximately 30% of the U.S. workforce are now independent contractors. If you were one of them, and you were paying 12.4% of every dollar you made into Social Security, that comparison would be quite real to you. Put yourself in their shoes.

        • Anon Enigma says:

          You must see the difference between 12.4% and 24.821%. More than double. When it maxes out in 2021, it will be 35.678%, almost triple the Social Security contribution.

          It’s ultimately abut the total contributed by the employee and the employer.

          • Tough Love says:

            Wrong, because just looking at the relative ee/er contribution level doesn’t reflect the much great PUBLIC Sector Plan “generosity”.

            Taxpayers should contribute a DOLLAR AMOUNT toward Public Sector pension AND benefits EQUAL TO (but no greater) than what THEY typically get from THEIR employers, and doing so would likely leave Public Sector workers responsible for 75% of THEIR total Plan costs ….. simply BECAUSE they are always MULTIPLES more generous than that granted Private Sector workers.

            Beyond just the much richer PUBLIC Sector pension “formulas”, do you thing retiring and collecting an unreduced pension at an age 10 years younger than their Private Sector counterpart comes cheap?

            Do you think get annual COLA increases, almost unheard of in Private Sector Plans comes cheap ?

  14. S Moderation Douglas says:

    I never heard of a “slug” before Chris Reed brought it up in May, 2014.

    See Chris Reed remarks:

    http://calwatchdog.com/2014/05/05/longevity-breakthroughs-make-pension-reform-even-more-crucial/

    Apparently, a “slug”, by his definition, is “CalSTRS CEO Jack Ehnes Recommends 50% Increase to CalSTRS Pension Benefits”

    Most people, including journalists, apparently never go beyond, or only perfunctorily, the slug.

    It’s out there. That bell can’t be unrung. I guarantee I will see this “slug” in future blogs. Just like the “50% increase”. Que así sea; we will deal with it as it occurs.

  15. SkippingDog says:

    An interesting claim you make about the Manhattan Institute being a “respected organization.” I suppose if you’re a zealot on the far Right fringe, it seems so.

    http://www.sourcewatch.org/index.php/Manhattan_Institute_for_Policy_Research

  16. S Moderation Douglas says:

    This article just gets weirder every time I scan back through it.

    Lydia Petitjean, how dare you “purportedly” express your opinion?

    And you, along with Anon Enigma, are now my new hero.

    I’d best get back to my chores before I am overwhelmed by the rhetoric.

  17. althink says:

    It is a little unclear exactly what Mr Ehnes is suggesting to improve teacher retirement income; but, he is clearly wrong on the best solution. The best solution for education quality and for most teachers is bring teachers into the Social Security System with corresponding changes to the defined benefit system and retirement savings programs.

    I expect this this will help most teachers and help education even if it does not help those few with the most longevity working in a CalSTRS system. What happens now is that young teachers that expect to have mobile careers that may take them to non-CalSTRS systems(for example, in another state) effectively subsidize the retirements of high-seniority teachers. Even if they vest, inflation is like to destroy the final average based pensions of young teachers leaving CalSTRs and they would have earned no Social Security benefits. The same is true for young people that try teaching but then choose to move on to another career.

    Any young teacher or mobile teacher that expects to not be able to stay put for a lifetime should not accept a job in CalSTRS districts. The current retirement system hurts education by reducing labor supply. The lack of Social Security coverage also encourages unions to contract for excess job protections because the poor design of the CalSTRs retirement system increases the financial penalty for being laid off.

  18. Tropicana says:

    Another piece on pensiontsunami, “Illinois Pensions, What went Wrong?” describes how union reps and lawmakers signed off on pension increases and pension holidays with no understanding of pension math. Some of the comments from teachers that I’ve read on philly.com show that most of them have NO idea how pensions are funded. One guy keeps insisting that since PSERS got 15% returns one year, it will continue to grow that fast from now on. Never mind the 10% correction that just took place in the stock market. Our teachers must be teaching the kids some wierd lessons on personal finance.

  19. john m. moore says:

    Systems that continuously rely on additional input by taxpayers cannot survive. They must change or there will be a crash. DB pension plans are like the 2008-9 era of NIMBY real estate loans and its just a matter of time. Trace the performance of DB plans from 2000 to the present-at a 4% income rate they are under 50% funded- in spite of billions of contribution(tax) increases and POB. DB’s are a MONSTER. To interchange ideas with the beneficiaries of the MONSTER is like the definition of insanity.

    Whether the beneficiaries of DB plans share moral responsibility is a good moral issue; certainly those who deny the absolute fallibility of the DB system are untruthful.

    • john m. moore says:

      Errata-I meant NINJA loans, not NIMBY

    • Equal Time says:

      A friend recently postulated this, and I wonder what your reaction is. Here goes – the apparent fact that the taxpayers are on the hook for pension fund unfunded liability is no different than the taxpayers being on the hook under the FDIC bank and savings insurance program where the ultimate liability falls upon the full faith and credit of the government (and thus the taxpayers).

      • Ed Ring says:

        Equal Time – That is an interesting question. Here are two differences between taxpayers bailing out pension systems vs. taxpayers bailing out the FDIC insurance program:

        1 – The FDIC is for the benefit of every citizen, government pensions are only for government workers. Bailing out the FDIC benefits everyone. Bailing out government pensions, also a bailout which everyone pays for, only benefits government workers.

        2 – The benefits of bank savings for the average citizen are meager. Their risk free investments earn less than inflation. Their brokerage accounts, to the extent they even get FDIC coverage, rise and fall with the market with no guaranteed return. If there are employer matches, they are rare, and never more than one-to-one. Pension plans for government workers, on the other hand, guarantee roughly 7.0% annual rates of return with employer matches that are rarely less than two-to-one, and often much more.

        • Equal Time says:

          Thanks. I follow your logic, only would say that everyone does not benefit from being bailed out by the FDIC, just those that have money in an insured institution. As you know, many of the poor do not have bank accounts. Plus, with the lousy, almost non-existent interest rates on money market and CD’s, some of us who do have a bit of cash are more and more tempted by the old coffee can in the back yard. (I recently saw a bank offering a whopping 1% a year if you had $100K you were willing to tie up for 5 years.)

          • Ed Ring says:

            Where we may be in complete agreement regards the progressive formulas that apply with respect to the Social Security benefit, where lower income people can recover as much as 50% of their final income, compared to higher income people getting far less. For a government funded minimal safety net, which is what Social Security currently is – nothing more – I think this sort of progressive benefit formula is very appropriate. But it raises important questions:

            Why aren’t public employees part of Social Security? Since they earn more than the average private sector worker, especially if you don’t normalize for education, their participation will be a significant financial benefit to the system. Like most private sector professionals, they will put in far more than they get back. Since private sector professionals have to make this contribution to society, why aren’t public servants also required to so so?

            Why isn’t the principle of progressive benefits applied with public sector pension formulas? Why isn’t there, at the very least, a ceiling, if not an actual sliding scale where the more you earn, the less – as a percentage – you get back in the form of a pension?

          • Equal Time says:

            Mr. Ring, here are my thoughts on the questions you pose. First, why aren’t all public employees in Social Security? I suspect there are as many answers as there are jurisdictions, but I can tell you that in some cases it is because the municipal employer fought any such proposal, including in proposed federal legislation, being worried about the cost.

            As to your question about why the principal of progressive compensation as you describe it is not applied in the public sector I believe it is because when the pension plans were established and well into the 90’s the pension plans were designed as a benefit that would incentivize employees to have a long career with the government entity. Longevity was valued and encouraged, and the pension plan structure made it more and more financially painful for the experienced (20 years or more) employee to go elsewhere. One name for such a system is that it provided golden handcuffs, keeping employees vs. moving them out. You are probably thinking the world has changed since then, what with pension plans now encouraging employees to retire at a young age. I would agree, and believe it or not think that the brain drain being experienced by state and local government in California because of these comparatively early departures is a disservice to the taxpayer. But, I have yet to find an elected with that kind of foresight, especially in your county.

  20. Tough Love says:

    Mr. Ring,

    S Moderation Douglas is bashing you in the comments at the link below. You might want to defend yourself.

    https://burypensions.wordpress.com/2015/08/25/christie-flops/#comments

    • Ed Ring says:

      Tough Love – if S Moderation Douglas wants to call attention to this post, he is to be thanked. Because it just means that more people will come here, read it, and make up their own minds. One of the comments recently posted here underscores both the complexity and the inequity of taxpayer backed public sector pensions – quoting from “Captain.”

      “My understanding of how the CalSTRS version of SB400 works is CalSTRS members continued to contribute their 8% contribution rate – but two percent of that contribution rate (25%) was diverted to a what’s called a “Cash Balance Account.“ That created a separate savings account in addition to their pension & longevity bonuses (did Jack Ehnes mention that?). They reduced their contribution rate 25% and are now asking taxpayers to fund both the difference and the “NEW ADDITIONAL” guarantee – while ignoring the fact that CalSTRS themselves took what should be considered a taxpayer reserve and converted those dollars into member benefits – completely wiping out reserves taxpayer have contributed over decades meant to cover costs in a downturn. And now taxpayers are being TOLD they must pay – even though CalSTRS members continue to receive benefits (longevity bonuses & Cash Balance subsidies) that were never a part of the original deal.”

      If this is true, it means that all these years, the 8% employee contribution into the CalSTRS pension fund was really only 6%, LESS than the 6.4% that private employees have withheld for Social Security. Before posting this comment, I checked with our researchers and verified this program exists. I haven’t yet verified this program applies to ALL participants in CalSTRS. The fact it exists at all is a travesty.

      • Tough Love says:

        FYI, He didn’t link to this article.

        I had quoted in Mr. Bury’s Blog your (very good) above comment paragraph listing all the “insulting” items … as I couldn’t agree more.

        S Moderation Douglas took that as an opportunity to bash just about everything you said HERE, w/o linking to it.

        • Equal Time says:

          I always thought you were a trouble maker, now you have proved it by trying to start a fight! Glad Mr. Ring did not take the bait.

          • Tough Love says:

            On the contrary, because I unintentionally brought on S Moderation Douglas’s tirade (by quoting THERE a paragraph of Mr. Rings in commentary HERE), I felt it appropriate to alert Mr. Ring of the “mugging” taking place on the other Blog.

          • S Moderation Douglas says:

            Tirade?

            Bashing?

            Mugging?

            Moi?

      • S Moderation Douglas says:

        Ed,

        Again, you are welcome.

        In case Tough Love didn’t catch it, I posted another “tirade” on the burypensions website. I thought it would be redundant to link this site again, but I did spell your name correctly.

  21. S Moderation Douglas says:

    Well, now you have gone and done it Ollie. 

    “California Dreamin’: Let’s Boost Teacher Pensions! (blog – Mary Pat Campbell / STUMP)”

    Everybody reads the headlines, nobody reads the “apology”.

    “I apologize for misinterpreting Jack Ehne’s remarks – which it appears I did.”

    “In the title of this post I have probably misinterpreted Jack Ehnes’ remark, and I am sorry. But I stand by every other word.”

    ……………………
    Typically, these kinds of headlines get shared through a whole subculture of websites. So far, it seems to be sites that no one really pays attention to, but it’s out there, spreading slowly, and at the instant access of anyone with a search engine.

    Well, the charge is easy to search, the ersatz apology; not so much.

    • Tough Love says:

      Just think about how far and wide all of YOUR BS commentary has been spread.

      That’s a far greater problem for uninformed readers swayed by your distortions, misleading statements, and omissions of material information.

  22. S Moderation Douglas says:

    I know!

    Cause it’s the same thing, right?

    Except Mary Pat didn’t headline any of my posts.

    Fair is fair, she didn’t post Ed’s “apology” either.

    I guess we’re even.

  23. Anon Enigma says:

    The retraction was appropriate, though I doubt that others in the blogosphere will follow your example. The claim about Mr. Ehnes’ statement has become a new “fact”

    Your retraction also contains a serious misunderstanding. You insist on comparing the 60% CalSTRS income replacement to what Social Security replaces.

    The point Mr. Ehnes was making, which any retirement advisor would make, is that, in order to maintain their pre-retirement standard of living, retirees need to replace at least 80% of the income they earned during their working years. If you’re in the private sector and counting on Social Security, that means deferring income to a 401(k). For teachers, it’s deferring income to a 403(b).

    Remember, lots of public employees (in 17 states, I believe)do not pay into Social Security and, even if they would qualify for benefits from other work, will have their benefits significantly reduced by the Windfall Elimination Provision (WEP). Their spousal benefits will also be reduced.

    If you know of any public pension system which pays into or matches contributions into a defined contribution plan (401k, 403b, 457b), please let me know – I doubt that there are any. What you infer from Mr. Ehnes’ statement, that he’s looking for public employers to help make up the retirement gap (expenses minus pension/Social Security), just isn’t accurate. He’s simply encouraging educators to save for retirement so that they don’t have to try to live on 60% of their income in a high cost-of-living state like California.

    Details matter. If you’re not sure, please don’t publish.

    • S Moderation Douglas says:

      Anon Enigma

      The city of Hayward tried to recruit me long ago. Their pension is through CalPERS (2.5@55, I think.*) No Social Security, but they have a 3.something% “deferred comp” employer match (up to a certain salary cap.)

      I’ve never seen anything like it. It is described (not clearly) on their various city websites.

      *Like all cities, new employees are now on 2%@62. They have a disclaimer that the city paid deferred comp may change if the city opts to, or is forced to, reenter Social Security.

      I’ve never seen any other like it. It just reinforces that you cannot generalize pension systems and formulas.

  24. S Moderation Douglas says:

    “Details matter. If you’re not sure, please don’t publish.”

    Or, if you are sure, but: “Their blithe, continual use of distortions, deceit, lies and misrepresentations is insulting. We don’t want to be like them, and we’re not.”

    Well, maybe. Imagine reading a headline sometime back. “Forbes says Hundreds Of California Government Employees Are Paid Over $400,000 A Year”

    Another “new “fact.

    Except Forbes actually said no such thing. It was a “guest commentary” by Mark Bucher. (It was printed in Forbes, however, and copied elsewhere.)

    Who?

    https://www.google.com/url?sa=t&source=web&rct=j&url=http://unionwatch.org/tag/mark-bucher/&ved=0CCIQFjABahUKEwj8gPDoxNLHAhXFoogKHY0HA_c&usg=AFQjCNHQzB3AfSo1r5SBUA8DGjgeJtmGNg&sig2=qoyAvuwqpqyl0J7DtkXmSg

    Yes, that Mark Bucher. Who apparently didn’t get the “distortions, deceit, lies and misrepresentations is insulting.” memo.

    The article, and the response from Redwood City.

    http://www.forbes.com/sites/realspin/2014/02/07/hundreds-of-california-government-employees-are-paid-over-400000year/

    http://www.redwoodcity.org/government/set_record_straight.html

    Of all the distortions, my favorite: “Those are staggering sums anywhere, but in a city with a population of just 79,009, they’re a recipe for fiscal disaster.”

    I am relatively sure that Mr. Bucher knows Redwood City, though not large, is nearly dead center in one of the most affluent and high cost areas in the state. Distortion?

    I think we will see links to this and many similar articles in the next couple of years. Whether Reed follows through on his initiative, or not.

    Hey! It’s on the web!

    • Ed Ring says:

      S Moderation Douglas – you’re hard to keep up with. Having now read the opinion piece in Forbes, and the response from Redwood City, it appears the city provided misleading data. When Mark Bucher, or anyone else for that matter, quotes Transparent California data, the information they rely on is exactly what these cities and other agencies have provided.

      In a way, what you’ve done proves our point. Apparently you’ve dug all the way back to February 2014 and found one thing that is incorrect, but not an intentional distortion of facts. You’ll look long and hard to find much more. But unlike the sites representing organizations we are critical of, who rarely allow comments, and when they do will ruthlessly screen out comments they don’t like, we welcome free speech and invite criticism of our work. Your comment was held by the system because of the links you added, but it has been posted now, along with this reply.

      If we don’t respond to everything you write, S Moderation Douglass, it’s because we have other work to do, not because we shrink from honest debate on these vital issues.

      • S Moderation Douglas says:

        First point, I didn’t “dig back” anywhere. A simple web search on pensions finds articles from far and wide, and “a long time ago”. As Anon Enigma said, it’s “in the blogosphere.” so,”If you’re not sure, please don’t publish.”

        …………..
        Second,”one thing that is incorrect, but not an intentional distortion of facts.”?

        I respectfully disagree. “Government Employees Are Paid Over $400,000 A Year”, colloquially means they made $400k this year, they will make $400k next year, and last year, adnauseum. It is plain to anyone who follows this subject at all, that that would be highly unlikely (Therefor requiring a higher degree of verification.)

        I am going to assume that Mark Bucher is intelligent enough to know the difference and was intentionally misleading. And one “other” thing misleading was the crack about “a city with a population of just 79,009”
        This ain’t Mayberry, or even Adelanto. Mark Bucher knows this. I am calling this piece pure propaganda.

        The “blithe, continual use of distortions, deceit, lies and misrepresentations is insulting.”

        —————————————–
        Now.

        Quoting Ed Ring: “When Mark Bucher, or anyone else for that matter, quotes Transparent California data, the information they rely on is exactly what these cities and other agencies have provided.”

        According to the disclaimer on Transparent California, “We are not responsible for errors contained in those public records.”

        CYA

        I had a long on line discussion about this with Mr. Fellner. I understand, compliance from local governments may be less than ideal, and there may be some confusion and conflation in the data. My point was, and is, that IF Transparent California sees a glaring error in the way their data is presented (as by Mr. Bucher) they have a moral obligation to correct that misrepresentation. If not a moral obligation, I should think it would be to their advantage to correct misinterpretations to uphold their own integrity and validity.

        Since we have segued to Transparent California, I submit the article by Stephen Moore, Heritage Institute: “The coming pension meltdown” (WAY back in Dec. 2014)

        Stephen Moore: “The report on Golden State government pensions contains a list that runs pages and pages of hundreds of “public servants” who have hit the pension jackpot with annual pensions of a half-million a year.”

        Again, not ambiguous, but untrue. These are clearly NOT “annual pensions”

        Most, if not all, have a note similar to this “Note: $482,873 of the pension amount reported comes from an annuity or lump sum payment.” On Transparent California, the note is highlighted in red. Hard to miss.

        If Mr. Moore wants to discuss the fairness or wisdom of the DROP program, he should clearly state so. I say, most readers of these two articles would clearly get the impression that the Redwood City firemen make over $400,000 EVERY year, and that the pensioners will get $500,000 EVERY year, for the rest of their lives. (And free medical, of course.)

        I say the “error” is intentional.
        I say it is propaganda.
        I say it is intentionally arousing anger.
        I say it is a blithe, continual use of distortions, deceit, lies and misrepresentations,and is insulting.

        I say Mr. Felner and his organization have a duty to correct these “errors” where they see them. If they don’t, I surely will, to the best of my capabilities.

  25. S Moderation Douglas says:

    It is late in California. Perhaps tomorrow we can discuss the role of Transparent California in the above article. If I can find the exchange between Robert Fellner and myself.

    “We don’t want to be like them, and we’re not.”

  26. Equal Time says:

    I have read the retraction. Two thoughts (1) you can’t un-ring the bell, and (2)most anyone except the wealthy philanthropists would have a very tough time living on an income that is reduced by 40% – isn’t that the real message of the article?

  27. Ed Ring says:

    Equal Time – Media properties and, to a lesser extent, think tanks, issue retractions all the time. It happens. And every time, “you can’t un-ring the bell.” Enough already. The point of this post, one of them, was that you CAN and you SHOULD be able to live on a retirement income equal to 60% of your pre-retirement income. In fact, most people would be thrilled to retire in their early 60’s (or sooner) with an income equivalent to 60% (or more) of what they’d made when working.

    Before pension system CEOs like Jack Ehnes start recommending that the government unions – who pretty much run his pension system, along with our state legislature and nearly every city, county and school district in California – start agitating for more pay or retirement benefits in order to secure “income replacement of 80 percent to 90 percent to maintain a similar lifestyle in retirement,” maybe he’d take a minute to consider how private citizens plan for their retirements.

    In the real world, we pay off our mortgage and other debts, we save what we can, we contribute to Social Security, we finish putting our kids through college, and once retired, we don’t have to allocate money to save for retirement. That reduces our expenses by 40% or more.

    If and when Mr. Ehnes figures out how taxpayer supported, government regulated systems designed to provide retirement security – which includes CalSTRS and the other government pension systems and also includes Social Security – can offer 60% income replacement to ALL retired American citizens, THEN he can recommend “income replacement of 80 percent to 90 percent to maintain a similar lifestyle in retirement” for CalSTRS participants.

    • S Moderation Douglas says:

      Nothing wrong with shooting for an 80% income replacement in retirement.

      The “rule of thumb” plans I’ve seen suggest that saving 18% of pay, starting at age 25, should (with Social Security) give about an 80% pension. Nothing wrong with Jack Ehnes passing that suggestion along.

      I’ve told all the kids and grandkids this. Trouble is, of course, its much easier to save 18% if your income is $83,000 a year, than if your income is $38,000 a year.

      “Enough already.”??

    • Equal Time says:

      I guess I had a different interpretation of what Ehnes was saying. I thought that what he was saying is that people who plan to retire with a CalSTRS pension should not just rely on that pension to maintain their lifestyle, they need to save and invest on their own to have a nest egg to draw from in addition. That’s all. That makes sense to me. And, of course, in response to the comment of S Moderation Douglas, teachers in California do not participate in Social Security so reaching an 80% target is more difficult/unlikely (especially in a stock market like the last few days).

  28. S Moderation Douglas says:

    Equal time. It occurred to when I reread my own post above.

    One must be careful of “rule of thumb” and “average” numbers.

    Ask yourself this: if your final salary were $100,000 a year, could you live on $60,000 in retirement?

    I could. (Ask me how I know.)

    Then ask this: if your final salary were $40,000, could you live in retirement on 60% ? (That’s $24,000 a year, BIG difference.

    • Equal Time says:

      I get your point S Moderation, but my answer is it depends. First,there is a difference between living and maintaining one’s lifestyle – I prefer the later. And, if one retires and must buy their own (primary or secondary) health insurance for spouse and self that can be a new expense of $10 K or more that makes that 60% level pretty painful. Then there is inflation – if the purchasing power of that 60% becomes 40% after a decade of inflation eating away purchasing power, then
      that is another drip drip drip of pain. No simple matter.

  29. S Moderation Douglas says:

    Well, now you’ve gone and done it AGAIN, Ollie.

    You’ve got Andrew Biggs (one of the 40 most influential people in the retirement world) involved in ………..a non – issue.

    Andrew Biggs: “The Chief Executive Officer of the California State Teacher Retirement System (CalSTRS) believes the state’s public school teacher pension plan is too stingy.”

    Well, Jack Ehnes never said any such thing. At least you spelled his name correctly.

    Three simple sentences. In the introduction to a report that 99% of the population never heard of, and those who do use it go straight to the data; most don’t even bother with the introduction.

    Throw in a reading comprehension problem and you have the recipe for mass hysteria. And, of course; Never let a good (imaginary) crisis go to waste.

    Andrew Biggs: “Anyone who thinks such pension plans don’t need significant reforms is either unable to understand the issues or doesn’t want you to understand them.”

    And, Lydia Petitjean, how dare you “purportedy” express a different view?

    I will understand if you don’t respond. I know you have other work to do, and you probably should quit before you make it worse.

  30. Eugene Allen says:

    A pension is only one part of a retirement portfolio. Anyone not maxing out a Roth IRA and making other investments will not have the retirement income to truly enjoy their time.

    Follow the solid financial guidance of always paying yourself first, live way beneath your means, cut out the bling, keep your car for 10 years, pay your mortgage off early. Never, ever cosign a loan of any type for anyone. No, not even for your children. Do not sacrifice your financial future for others.

    People do not plan to fail. They fail to plan.

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