In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year http://www.nytimes.com/2010/05/21/business/economy/21pension.html?src=me&ref=business
So... he works for maybe 20-25 years... then perhaps draws "retirement" benefits w/annual increases... for what, 50 FARKIN' YEARS? Any wonder why we're in this mess??
In Ontario, firefighters work 4-5 days a month (24 shifts at the station). Pay is 70-80K for new hires. Most hold a second, FULL-TIME, job. Then retire early with a massive pension. Can you believe that?
the key is in new york state and local government retirees are exempt from state and local taxes. they will always vote for higher taxes to safeguard their existing pensions.
Perspective... I'm dealing with this problem from the opposite side of the fence. I agree that the example cited is outrageous. However, during public employee pension discussions people often lump us all together. My commissioners for example are taking heat and expected to cut my pension further, as is the FL legislature. I'm 45 yoa worked as a cop, same city since 19 yoa. They froze our city pension and I'll get 30% of my pay as of 5 years ago (no raise for 5 years) when I'm 56. Now I'm paying 8% into a different defined benefit plan with a 2% multiplier. Meaning I get 2% of my pay for every year I pay in the plan as long as i retire after 55 yoa. So at 56, after 37 years of service I'll get 54% of my pay (between today's pay rate and what I'm making then.) Florida is trying to diminish the returns on the defined benefit plan too because some agencies have 4 and 5% multipliers instead of our low 2% rate. At 19 I went into this thinking low pay but secure benefits. So did I put 8 or 10% away for retirement? No, I HAD a "secure" pension. My $tiny IRA mixed with the above will barely beep me alive till SS kicks in. Further cuts or "broad brush" solutions to the public pension crisis seriously hurts guys like me. If you're in a position to influence your politicians I ask is that you remember how the miracle of compounded interest works for a 25 yoa vs a 45 yoa. Most 45-50 year old public sector employees are counting on that pension and have minimal or no 401 or IRA savings. My City didn't give a crap and froze their 20 year people just like their 5 year and newer people. BTW, the frozen plan was a 2% multiplier and full benefits not eligible until 65 yoa. So, it wasn't lavish or extreme, but reasonable. Solution; how about a threshold like new employees go into defined contribution plans but people on board 5 years get what was promised. Or if that's too much, have us pay an additional 2%, 3% of salary to keep what was promised. Something, just watch the broad brush approach. Any way, thanks for letting me vent. I'm glad I'm employed, I'm glad I'll have possibly 50% at 56, but not looking forward to what inflation does to that frozen pension. I trade my IRA, hence my being here.
One of the biggest problems with union pensions as well as SS/medicare was touched on several times in your post. Many public employees retire at 50-55. That is absurd, regardless of how early you started working there. People now have a life expectancy that is 78(ish) for males. In your case, let's say you retire at 56. That means you worked 37 years of your life. The first 19 were pretty much covered by someone else (likely your parents). The remaining 21 (assuming 78, as your life expectancy) are going to be covered by tax payers. So for a 78 year life, you worked less than half. The math doesn't add up. When SS was enacted, the retirement age was 62 (now 67), but life expectancies were around 60 (now 78). So if the average person started working at say 20 and retired at 62, that meant they worked well over half of their life. Those numbers make SS/medicare/pensions work. The bottom line is that as people live longer, they must work longer.
California also runs on the "Greek" model. The average public employee union member pays about $100k into the system. That $100k is worth about $1M compounded for interest from inception until death. The probem is, the average employee draws $3M in pension and health benefits before they die. It's all a giant Ponzi scheme, except that it's legal and the taxpayers have to pick up the pieces. Ten years ago, the state paid out $180M in retirement benets. This year it's $2.5 billion. The total unfunded pension/healthcare liability is now over one half TRILLION dollars.
Cops and firefighters working till 62-65 isn't a good idea. Heart/Lung/stress related health issues. That's why generally their pensions are pretty good at 55-58 yoa so that 75%-80% of their pay will sustain them through 78 yoa as inflation eats into it over the next 20 years. But 40 yoa or 45 yoa is crazy I agree, even 50 yoa should be penalized for "early" out like our plan currently does. Public safety employees are somewhat different in expectations of longevity in the workforce compared to other public sector employees, at least I hope most see it that way.