Federal workers’ pensions targeted in budget deal

But with pensions for non-government workers on a path toward extinction, federal employees get little sympathy from most experts. “Their private sector counterparts would be jealous of the benefits they’re maintaining,” said John Ehrhardt, a principal at the actuarial and consulting firm Milliman.

While 38 percent of private industry workers received pensions in 1979, just 14 percent did so in 2011, the most recent figures from the Employee Benefit Research Institute, which advocates for benefit programs. Besides retaining their pensions, most federal workers also can contribute to a 401(k)-like savings program, the Thrift Savings Plan.

That combination is far better than what’s available to most private industry workers. In 2011, only 11 percent of employees in the private sector had both savings plans and monthly pension payments, according to the research institute. For federal workers, the government matches up to the first 5 percent of employees’ contributions to their retirement savings. SOURCE:  Federal workers’ pensions targeted in budget deal – Yahoo News.

Up front I want to admit that this is likely a very contentious post where many might not agree with me. But when has that kept me from saying what I think. 🙂

I have very mixed feelings about this topic.  Should our government employees be able to benefit from plans no longer available to private sector employees? Or should they also go the way of current non-government trends? As the above article mentions in 1979 close to half of all employees received a defined benefit pension. I am one of those employees. I was lucky enough to get in my thirty years while that plan still existed.

My pension along with Social Security allow me to live a pretty comfortable life as long as it is lived with simplicity in mind. No I can’t dash off to the latest hot spot in the world for a quick get-away but I don’t have to worry about whether the bills are paid and especially where my next meal will come from.

Government exist to do the people’s business. Congressmen are there to represent us in political matters. Soldiers are to protect us from foreign enemies. EPA workers to help keep our environment clean. Government workers are solely there to do our corporate will.  Should they be treated and paid more than those they represent? I think the answer to that is no. Their circumstances should reflect those they are serving. So, yes when the private sector losses a particular benefit government employees should have to follow suit.

If only a 401(k) is good enough for the private sector then it should be good enough for the everyone. But of course we know that those in certain positions of power in both sectors are treated differently than the rest of us. When you leave the Oval Office you will lead a rather lavish lifestyle for the rest of your life at the expense of the taxpayers. When you are in the military you can retire before age forty with a pretty lucrative pension only dreamed of in the private sector.

Living in a perfect world everyone should be treated the same. But, of course, our world is anything but perfect….

15 thoughts on “Federal workers’ pensions targeted in budget deal

  • I have mixed feelings about this. My now retired husband worked most of his life for corporations that provided no pension, and I have always worked as a freelance writer. It was up to us to save and invest. HIs salary, however, was above that he was offered the brief time at the beginning of his working life when he worked in a comparable job for a government entity. Every raise for this government entity’s employees during that time was contentious, argued against by the constituents. This was in the 70’s, with rampant inflation. Families lost money each year when government wage earners’ salaries were kept near the same levels or even capped for years at a time while inflation was skyrocketing. The difference, however, was that the government entity offered stability and a pension. During that time, my husband used to point out government job ads in his area of expertise that required more than one degree and specialized experience, sometimes including fluency in another language, but yet paid ridiculously little. My talented sister finally left her government job when she was importuned to leave by a corporation that sought her skills and offered her more than double what she had been making.

    The balance for government employees who stayed must always have been that stability and pension as well as the satisfaction in their work. While we’re currently hearing complaints about pensions for government employees, however, we’re also hearing complaints about their salaries, so I doubt the contentiousness about salaries and raises for government employees has stopped. Without those pensions, how will we attract seasoned or talented employees?

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  • I don’t know what to think of GS service. The idea was to move them from public pension to self(TSP match) in 1986 under Reagan. It was stopped by Congress- with pressure from the unions, not before TSP was implemented. Now they have both private AND public pension. I think that many government workers would stay on the job if the public pension went away. It is a dependable wage(right now) and TSP is already in place.

    The Rumsfield plan of contracting out non specific work was going well, but in order to get workers, contractors are paying $45,000 for the delivery truck drivers and mail room clerks. Then again, the average rent in the metro area is over $1000 a month for a studio. Some serious deflation would need to happen if salaries became realistic. No one wants that on their watch. Certainly don’t want to live without the person who pushes the elevator button in the Capital!
    At least we don’t need to worry about contractor pensions, or do we?

    PS- lucrative military retirement pay at 38 is most likely around $1000 a month and more then likely to be an AirForce enlisted who can be recalled at anytime until they are 60.

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  • Like Linda, I too have mixed feelings about public pensions. Some are excessive to be sure. My husband worked for city government and I worked for the public schools. We both have modest pensions…not as good as Federal workers but nonetheless they are a Godsend. I think these pensions and benefits were originally negotiated in times of plenty and there wasn’t as much opposition at that time. I can’t blame anyone for taking a good deal if its offered. Now however, those benefits are becoming a burden because times have changed and money is scarcer. I do believe we must keep the deals we made to existing retirees. But, it is clearly time to reform these salary and benefit contracts going forward.
    Once again, I don’t quite follow what Janette is saying. Not all Federal workers live in D.C. and I don’t think that military need to have more in pension benefits than anyone else if that’s what she means. Military jobs are taken on a voluntary basis knowing all the positives and drawbacks up front, right?

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  • I don’t think it is about taking pensions away from those who have previously earned them but instead moving the plans for future retirees to more reflect the private sector. That is pretty much how it was done in the corporate world.

    As far as military pensions before age forty even if it is only $1,000 per month that is over $300,000 just to age 65. My wife worked for twenty years for a major corporation as a secretary. When she left the work force at 48 for health reasons she had no pension benefits. At 65 she started getting about $400/ month with no cost-of-living increases. So, she put in the same time but with probably half a million dollars less compensation.

    You are right about a couple of things Jane. Compensation is not the same for all public employees. For that reason I too have mixed feelings. The second thing is that I don’t quite follow Janette either in this case or many past ones. That is what makes interacting with her so interesting 🙂

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  • I am sorry that you wife, as a corporate secretary, did not get a pension. I worked as a teacher for 30 years, but do not have a pension since I moved with my military husband. Still, I saved a great deal of money so I could supply my own retirement- on no more than $40,000 a year. Of course, I never shot at either. Why do you think you got a good pension and your wife did not?

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  • Please remember that when federal pensions were introduced, federal government members were not allowed to pay into the social security system. Also remember that is STILL true of many state employees including almost every teacher in the US.
    They do not get SS, and are not allowed to get ss, period. My husband is one of the few people his age to get SS and most of the people older than he do not.

    I do receive a federal pension. My husband paid into that pension for over twenty years, every single pay period. Even if you were to remove the matching funds, I would still have a pension because my husband paid into it. not because it was given to him. so while I might have no problem having that matching amount removed I would have a huge problem with removing the ability to contribute by me.

    Also, say what you will about government management, the US government pension fund is managed well. Many of the private pension funds were eliminated not necessarily because of cost, but because of poor management.

    Yes, federal workers do the “will of the people”. They also do lots of things that other people will not-go overseas to various countries (some of which are beyond dangerous), maintain two households (one overseas and on in the us because one has to have a place to come home to or cannot sell the house), and so on.

    As far as military pensions, it’s very simple. My brother in law is retired career military. He was part of an all volunteer army. He is now retired with a full pension. He also did a total of six years (this time, not counting the previous time) in the middle east. He limps, he has a bad ear and he just had to leave a family wedding because of the noise and ptsd. I’d suggest that if you want people to VOLUNTEER to do that, then the pension is in fact a small price to pay.

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    • Barb, thanks for the input. It definitely adds value to this conversation.

      I did not mean to imply that I don’t appreciate all that federal and State employees do. In fact I very much appreciate their service to our country.

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  • Which part do you not follow Jane?
    I am sorry I am so confusing RJ. Maybe if you had asked me earlier, I could have explained in a different way.
    I do come from an entirely different background. I don’t know anything about private pensions or union pensions.

    My point about the military, Jane, was that $1000 a month is not a lucrative retirement. It is what they agreed to. I don’t see many asking for more. I do see many, including RJ, asking why they deserve any of it – like his wife.

    I refer to DC, Jane, because the majority of higher paying federal (GS- government service) jobs are in that area. The federal government employs 14% of the region. That does not include the contract workers working for the federal government. It is much easier to see the federal money when visiting my daughter there.

    I am wondering, Jane, why it is important to continue fully funding teacher or other city or county or state pensions that are a burden to the society? Is it for the same reason the retired, or retiring military object to their pay being cut? A deal was made, and it should be stuck to, no matter the economy?

    For information:
    TSP – Thrift Savings Plan. It is a plan much like a 401K. Introduced to the government service workers in 1986 with a match for the first 3% of money placed in (a choice). It was introduced the same time as FERS. FERS opted government service workers out of Social Security as long as they contributed 10% of their salary. They are allowed to get a pension after 30 years of service.
    If you leave early , you can get the exact amount back (no interest) or wait until you are 65 and get the more limited pension.
    The military was allowed to join TSP about ten years ago. They do not get any match.

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  • Thanks for clarifying, Janette. I do not know as much about the military or D.C. as you do, that’s for sure. I suppose there are some school districts where teachers and other staff have fully funded pension…but not around here. My husband and fellow city workers, and I and all the teachers in this area paid heavily into their pension …and…social security. Our take home checks were not very big after all the deductions, I can tell you. We also paid toward our health insurance for all our working years. Health insurance ended at retirement for us…cobra is allowed until age 65 when Medicare is available. Yes, there are some matching funds for TSAs…not sure how much anymore. When I was hired in 1988 I had a choice…severance based on a longevity formula or the TSA. I chose severance so I could not later change my mind. But, when the time came tto retire the severance could no longer be paid directly to me…it had to go into a state Health Saving Account and withdrawn according to those rules. Which is fine by me. My husband had the same deal when he retired from the city. The schools have since discontinued severance and only allow TSA contributions. Anyway, my point is that I was extremely lucky to get the benefits I did. I don’t deny that. But, nothing was fully funded by the government and it was not a free ride on a gravy train. We paid our fair share for many years.
    I know the main issue was Federal pensions, but I’m sure the opinions about lower level public servants are very similar. I repeat that I realize changes and reforms must be made to go forward….just don’t leave anyway in the dust like some companies have done to their retirees.

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  • I found a good quote from our Minnesota PERA (public employee retirement assoc) site
    that clarifies what I tried to explain.

    “Myth: Taxpayers are on the hook for all of Minnesota’s public pension costs.

    Fact:Over the last 20 years, taxpayers (through employer contributions) have paid only 16 cents on the dollar of the total revenues of the three statewide pension systems. Deductions from our members’ paychecks made up 14 percent of pension plan income, and the return on the investment of those contributions has been responsible for 70 percent of our total revenues. (2013 comprehensive financial reports of PERA, MSRS, and TRA)”

    I’m just saying…not all public pensions are fully funded by a long shot.
    Sorry if I have strayed off topic of Federal Pensions…but many people lump state and federal together in their thinking.

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  • RJ, thank you for creating a site where people can discuss the pros and cons of such issues in a reasonable manner, without resorting to the name calling, taunts and rage sometimes encountered in such discussions.

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