Defined benefit (DB) governments retirement programs with very few exceptions have been a failure and this article is one more example. DB programs have the one thing which is completely inconsistent with a sound retirement program: SPIKING! This article has just one example. DB programs are both a very bad plan and open the way for very bad people (legislators and other political types) to game the program with spiking.
Much like Captain Renault in Casablanca the author is shocked, shocked that there is no provision in the bill “that the state should pay for the added cost up-front.” That is simply just not part of a DB plan. There never was any connection between benefits in a DB program and payment for them. Benefits are allegedly being paid for by design over the next 20 or more years after accrued.
The game is rigged when benefits are based on how much you can game the program by spiking. Regular folks with the lower paid jobs are taking it on the chin. They do not get near the spiking which the six figure big shots do and who really have the super spiked pensions.
And, how is spiking paid for. Most spiking is done the last 3 or 5 years of employment depending on whether the pension is based on the High 3 or High 5. Many times it is done on the last day by taking unused sick, vacation, and leave time in a lump sum. As mentioned above, DB pensions are supposed to paid over the next 20 year and by a formula which no one understands and phony numbers are used by the crooked politicians with the biggest spiked pensions.
In contrast at the University of Kentucky and University of Louisville there are defined contribution (DC) individual retirement accounts with a choice to invest in funds with Fidelity or TIAA CREFF. Then on retirement there is a choice to buy an annuity with TIAA CREFF including one with an increment. No Kentucky politician has ever got to UK and U of L and told their employees they should be transferred over to the DB state programs. An Olympic gold medal fencer is at U of L. Imagine what she would do to such politicians.
This bill WOULD cost billions, but not one dollar more than the regular cost of state employee retirement pensions will cost anyway. The pensions will HAVE to be paid eventually. Allowing employees to leave 3 years early FROM THIER OWN retirement date would actually cost LESS. 1) employees who replace those retiring will pay a much higher amount into the pension system than those leaving, and 2) these retiring employees may NOT EVEN BE replaced at all- and savings will be by attrition. The genius part of this bill is that it is not a budget nor a pension buster because it’s not an immediate retirement bill. Some employees will be eligible to retire now, some not for 30 years! Completely spread out. Pay no attention to the dour nonsense of the feckless “Pioneer Institute” – they, like Mikey from Life Cereal- hate everything.
Defined benefit (DB) governments retirement programs with very few exceptions have been a failure and this article is one more example. DB programs have the one thing which is completely inconsistent with a sound retirement program: SPIKING! This article has just one example. DB programs are both a very bad plan and open the way for very bad people (legislators and other political types) to game the program with spiking.
Much like Captain Renault in Casablanca the author is shocked, shocked that there is no provision in the bill “that the state should pay for the added cost up-front.” That is simply just not part of a DB plan. There never was any connection between benefits in a DB program and payment for them. Benefits are allegedly being paid for by design over the next 20 or more years after accrued.
The game is rigged when benefits are based on how much you can game the program by spiking. Regular folks with the lower paid jobs are taking it on the chin. They do not get near the spiking which the six figure big shots do and who really have the super spiked pensions.
And, how is spiking paid for. Most spiking is done the last 3 or 5 years of employment depending on whether the pension is based on the High 3 or High 5. Many times it is done on the last day by taking unused sick, vacation, and leave time in a lump sum. As mentioned above, DB pensions are supposed to paid over the next 20 year and by a formula which no one understands and phony numbers are used by the crooked politicians with the biggest spiked pensions.
In contrast at the University of Kentucky and University of Louisville there are defined contribution (DC) individual retirement accounts with a choice to invest in funds with Fidelity or TIAA CREFF. Then on retirement there is a choice to buy an annuity with TIAA CREFF including one with an increment. No Kentucky politician has ever got to UK and U of L and told their employees they should be transferred over to the DB state programs. An Olympic gold medal fencer is at U of L. Imagine what she would do to such politicians.
This bill WOULD cost billions, but not one dollar more than the regular cost of state employee retirement pensions will cost anyway. The pensions will HAVE to be paid eventually. Allowing employees to leave 3 years early FROM THIER OWN retirement date would actually cost LESS. 1) employees who replace those retiring will pay a much higher amount into the pension system than those leaving, and 2) these retiring employees may NOT EVEN BE replaced at all- and savings will be by attrition. The genius part of this bill is that it is not a budget nor a pension buster because it’s not an immediate retirement bill. Some employees will be eligible to retire now, some not for 30 years! Completely spread out. Pay no attention to the dour nonsense of the feckless “Pioneer Institute” – they, like Mikey from Life Cereal- hate everything.