Bad assumptions endanger pensions
April 30, 2009
On Monday The Baltimore Sun presented us with yet another excellent analysis of an important issue facing legislators and the public, this time in the form of unfunded pension obligations in local and state government pension plans in the state ("No quick fix," April 28).
In looking at the various assumptions used regarding investment yields in the plans, it is no surprise that these plans are seriously at risk. Nowhere in my long experience working with private pensions have I seen or heard of a plan's assumptions of 7 percent to 8 percent per annum.
Where were the pension boards, where were the actuaries, where were the auditors? If current pension promises are kept for these plans, the public will likely face huge increases in taxes for a long period of time.
This is scandalous. When will our elected representatives do their jobs in a responsible way?
Sam Davis
Towson
The writer is a former manager for Black and Decker who worked with the company's pension plan.
I wonder what the long term pension plan and retirement health care obligations are for Government Officials in Wicomico County, City of Salisbury, the Board of Ed, and for safety officials like Detention Center Employees, Sheriff's Office employees and City Police.
Elected officials . .. are you looking at these future promises that our children will have to pay? Are the benefits reasonable? Are they increasing or decreasing? Aren't these overly generous benefits what brought down the automakers?
DelMarVa's Premier Source for News, Opinion, Analysis, and Human Interest Contact Publisher Joe Albero at alberobutzo@wmconnect.com or 410-430-5349
8 comments:
As a teacher, I don't think my pension is overly generous. I pay 5% of my pay from every paycheck towards my pension and next year it goes to 6%. It isn't like it is handed to me, and hopefully it will still be there when I retire. You take a lower paying government job for the job security and benefits. If you really investigated, you would find that the teacher's pension is less than that of other state and government employees. The problem is with the state's management of the pension system. They have not accounted for all the retirees coming into the system and they have mis-managed the pension system.
The days of put in your 20 and retire are gone, never to return unless the indiviual person makes good investments on his own through-out the 20 years.
10:53 - Be satisfied you have a dependable job with such good benefits. Most professionals in any field contribute to their own retirement funds. And you think you're taking a "Lower paying government job for the job security and benefits?"
Teacher pensions were increased by the MD legislature in the last 2 years. Your own national union (NEA) reports that average teacher salaries in Maryland are 8th highest in the country. Starting teacher salaries - fresh out of college - on the eastern Shore are above $40,000 for 10 months work, more than a week off at Christmas + paid holidays, sick days, personal days, vacation and tuition assistance. Nearly 90% of health insurance is paid for employees and 70 % for family + more than 1/2 of the premium is paid for retirees.
Who has to pay for all of that? It's all of our tax dollars paying for your benefits while we have to fund our own as well. No wonder there is a revenue cap.
Thank God Wicomico County leaders saw this coming and did not approve a new retirement system for their employees. The employees deserve a new retirement, but there is no tax revenue to pay for it.
Salisbury Wicomico Economic Development's (SWED) own website shows from 2006 thru 2008-2nd Q, private employment in Wicomico LOST 503 jobs while the government sector GAINED 1011 jobs.
http://www.swed.org/DistOfEmp2.asp
There have been 878 jobs added to local govt! Look at 2006 column vs 2nd Q 2008 column. Where are all these jobs added?
1:54 is right. How will the city and county pay the pensions and retiree health care costs for all these future retirees with the local tax base declining?
1:07 Seems like you should have continued through high school and into college and became a teacher.
Sorry 1:07, I was working my second job and couldn't respond sooner. Yes as a teacher for almost 10 years, I have worked 2 jobs every year to provide for my family.
I am happy and satisfied with my job, but I don't feel my compensation is "overly generous." Especially when compared to other professions with a master's degree. Other professions make much more than teachers. Now if you want to compare teachers to those with no college education, then yes we do make good money, and we earn it.
Yes the state has increased the teacher pension over the last 2 years because it was one of the lowest in the country. Teachers have also increased their contributions each year as well.
The average teacher salary in MD is skewed by the counties on the western shore. For instance, Montgomery County's salary range goes from 46,000 to 103,000 for teachers, while Wicomico's tops out at 76,000. You only get to the top after more than 25 years in the profession. So, counties like Montgomery significantly inflate the average teacher salary in Maryland. You forgot to mention that Maryland schools were also ranked #1 in the country. So maybe we should be paid for our performance and have our salaries be ranked #1 as well. Yes, teachers work for 10 months, but do not get paid for the 2 months we have off in the summer and don't get paid for vacations or holidays as a result. I will tell you for a fact that good teachers do more work in that 10 months, much of it on their own time, than most people do in a year.
You said, "It is all of our tax dollars paying for your benefits." You're right, teachers pay taxes just like everyone else. We buy homes and pay property taxes, we buy cars and many other items. Teachers contribute their fair share to the tax pool. In return for the pay and benefits that we "all" pay for, teachers provide a service to the taxpayers of this county and state. We teach all the children that come to us regardless of socio-economic status, race, or disability.
Teaching is the toughest and most rewarding job one could undertake. Now there are some teachers who are ineffective, or just bad and they need to be identified and weeded out. However, there are many very good teachers out there who go way above and beyond for their students. Those teachers deserve every penny and benefit they receive and then some. So Annon 1:07, if you think we have it so easy, go back to college and get your degree and then join us. We could use your help, plus you'll get all those "overly generous" benfits.
3:23 Up until the last 10 months, pension funds invested in the stock market were doing quite well for years. The problem for many government pension funds is they have what is called unfunded liability, which means while the employees are making their contributions to the pension fund, the jurisdictions aren't. Instead they spend the money that should go into the pension fund and put an IOU into the fund instead. Exactly like what the federal government does with Social Security.
Governments have to provide incentive to attract and retain employees in specialized fields because, as the one commenter said, the pay alone isn't enough to attract qualified people. The bottom line is, if the government could get away with providing less to its employees, it would. Police agencies all improved their pension systems to attract qualified applicants when the pool of qualified applicants was shrinking. Without them, many departments would be hurting for good people.
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