A cautionary tale about pensions and wages

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
student
Posts: 4866
Joined: Fri Apr 03, 2015 6:58 am

Re: A cautionary tale about pensions and wages

Post by student » Fri Jun 26, 2020 5:51 am

BernardShakey wrote:
Sat Jun 20, 2020 12:36 am
X528 wrote:
Fri Jun 19, 2020 9:18 am
Regarding the college bubble:

https://johntreed.com/blogs/john-t-reed ... om-scratch
[ quote fixed by admin LadyGeek]

Really ? [Rude comment removed by admin LadyGeek] Half the article is him telling me what he has done. Oh please...
[ quote fixed by admin LadyGeek]

I skimmed through the article. I agree with your assessment.

Seasonal
Posts: 1635
Joined: Sun May 21, 2017 1:49 pm

Re: A cautionary tale about pensions and wages

Post by Seasonal » Fri Jun 26, 2020 6:18 am

Blue456 wrote:
Fri Jun 19, 2020 5:21 pm
X528 wrote:
Fri Jun 19, 2020 9:18 am
KlangFool wrote:
Fri Jun 19, 2020 8:15 am
Folks,

We have a healthcare bubble and a college bubble. The bubbles have to burst sometime.

KlangFool
People primarily associate bubbles with costs (healthcare costs, real estate and tuition).

Does this apply to physician/nurse salaries (for the healthcare bubble) and professor salaries (for the college bubble) too? Are salaries in these professions going to decrease. American doctors in the U.S. are the highest paid in the world I think.

Regarding the college bubble:

https://johntreed.com/blogs/john-t-reed ... om-scratch
They are higher paid for a good reason. My student loan is $450,000 and it took me 12 years to become a physician. If you decrease my salary, I will just move to Canada and let you see a nurse practitioner instead. Most likely I will retire in 15 years and this will be right when I am about to be at my experiance peak. No, I will not have a mansion, a Lamborghini or even Mercedes Benz. I will live in a small house and drive a Honda. But at least I will not have to deal with the corporate nonsense and government metrics. A lot of young physicians who graduated with me are looking into the same, FIRE and call it a day. We are burned out and public still thinks that we are millionaires.
Physician pay is not the problem here, it is the corporate world that cares more about money than your health. Patient satisfaction scores more than patient outcomes. And of course the government, that cares more about useless metrics requiring me to click 100 times per visit than me actually spending more time with you. There has been entire industry created to exploit physicians and patients.
potatopancake wrote:
Fri Jun 19, 2020 9:40 am
With the amount of debt, years of training, and low pay during residency, physician pay should not be decreased. A family medicine doctor in 2019, on average, generates 2.1 million dollars for their hospital system and earns, on average, total compensation of $247,000 (incl. benefits and bonus). This salary is after incurring an average of > $200,000 student loans and seven years of post-college training.
You have not taken into account 7-8% interest on federal loans for both graduate and undergraduate and then 3-7 years of post graduate training during which those loans are not being paid.
A major reason physician pay is so high is that physicians have a government granted monopoly. It is illegal to compete with physicians if you are not one. It's not usual for a business to be able to have its competitors arrested. Restricting immigration and licensing of non-US physicians also restricts competition. These are massive government benefits. Prices would be much lower without them.

Economics teaches us that market prices are a function of supply and demand. An implication is that a worker with high student loans is not going to be able to charge more than one without.

MNSooner
Posts: 5
Joined: Sun Jul 05, 2015 5:46 am

Re: A cautionary tale about pensions and wages

Post by MNSooner » Fri Jun 26, 2020 7:36 am

This is overstated. Everyone from midlevel practitioners, to faith healers and holistic vitamin salesmen, “compete” with physicians to a greater or lesser degree.

Seasonal
Posts: 1635
Joined: Sun May 21, 2017 1:49 pm

Re: A cautionary tale about pensions and wages

Post by Seasonal » Fri Jun 26, 2020 8:23 am

MNSooner wrote:
Fri Jun 26, 2020 7:36 am
This is overstated. Everyone from midlevel practitioners, to faith healers and holistic vitamin salesmen, “compete” with physicians to a greater or lesser degree.
A very lesser degree. For example, surgery, prescription medicine, blood tests in most states, hospital rights, etc., etc.

KlangFool
Posts: 16556
Joined: Sat Oct 11, 2008 12:35 pm

Re: A cautionary tale about pensions and wages

Post by KlangFool » Fri Jun 26, 2020 10:57 am

Folks,

A) If the common folks cannot afford to pay for health care, there will be a drop in demand.

B) If the common folks cannot afford to pay for the college education, there will be a drop in demand.

With the wage growth slower than inflation and both health care and college education costs increase faster than inflation, they are bubbles that will burst. It is just a matter of time. It is a basic supply versus demand equation.

KlangFool

Maverick3320
Posts: 564
Joined: Tue May 12, 2015 2:59 pm

Re: A cautionary tale about pensions and wages

Post by Maverick3320 » Fri Jun 26, 2020 11:46 am

KlangFool wrote:
Fri Jun 19, 2020 9:36 am
X528 wrote:
Fri Jun 19, 2020 9:18 am
KlangFool wrote:
Fri Jun 19, 2020 8:15 am
Folks,

We have a healthcare bubble and a college bubble. The bubbles have to burst sometime.

KlangFool
People primarily associate bubbles with costs (healthcare costs, real estate and tuition).

Does this apply to physician/nurse salaries (for the healthcare bubble) and professor salaries (for the college bubble) too? Are salaries in these professions going to decrease. American doctors in the U.S. are the highest paid in the world I think.

Regarding the college bubble:

https://johntreed.com/blogs/john-t-reed ... om-scratch
X528,

1) If the whole industry is going to hell, why would the salary of those working in the industry not being affected? Just look at the Telecom and Oil industries.

2) If college education is going remote, what is there to stop the top universities of the world to compete to the universities inside the USA?

KlangFool
Why would #2 be a bad thing?

Maverick3320
Posts: 564
Joined: Tue May 12, 2015 2:59 pm

Re: A cautionary tale about pensions and wages

Post by Maverick3320 » Fri Jun 26, 2020 11:49 am

KlangFool wrote:
Fri Jun 26, 2020 10:57 am
Folks,

A) If the common folks cannot afford to pay for health care, there will be a drop in demand.

B) If the common folks cannot afford to pay for the college education, there will be a drop in demand.

With the wage growth slower than inflation and both health care and college education costs increase faster than inflation, they are bubbles that will burst. It is just a matter of time. It is a basic supply versus demand equation.

KlangFool
I would disagree on #1, at least to an extent. Calls will simply increase for the government to pay for the healthcare. And if economics teaches us anything, it's that a good given away for "free" will be overused.

On #2, there are good arguments to be made that there is too much demand for tertiary education, which partially leads to higher prices.

User avatar
Forester
Posts: 1263
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: A cautionary tale about pensions and wages

Post by Forester » Fri Jun 26, 2020 11:54 am

Paying out of the nose to attend a "place of learning" which attains some of its value from perceived prestige, seems as archaic as the 1990s shopping mall. Students go to this place then..... do much of their research online, which they could do from any location. I think the future is remote learning with occasional in-person meet ups.

Elite universities don't need to be a model rolled out to the entire population. To be frank too many young people are formally educated which creates resentment as they're weighed down by debt and there aren't enough professional jobs in the economy to employ these people. It's also anti-social because these former students who are over-qualified become a cohort of opinion which views working class people (who did not receive a higher education) with contempt.

KlangFool
Posts: 16556
Joined: Sat Oct 11, 2008 12:35 pm

Re: A cautionary tale about pensions and wages

Post by KlangFool » Fri Jun 26, 2020 12:04 pm

Maverick3320 wrote:
Fri Jun 26, 2020 11:49 am
KlangFool wrote:
Fri Jun 26, 2020 10:57 am
Folks,

A) If the common folks cannot afford to pay for health care, there will be a drop in demand.

B) If the common folks cannot afford to pay for the college education, there will be a drop in demand.

With the wage growth slower than inflation and both health care and college education costs increase faster than inflation, they are bubbles that will burst. It is just a matter of time. It is a basic supply versus demand equation.

KlangFool
I would disagree on #1, at least to an extent. Calls will simply increase for the government to pay for the healthcare. And if economics teaches us anything, it's that a good given away for "free" will be overused.

On #2, there are good arguments to be made that there is too much demand for tertiary education, which partially leads to higher prices.
Maverick3320,

1) Why do you assume that the government can afford to pay?

2) Whether that is true or not, it does not change the fact that the costs are outpacing the ability to pay. The student loan can only cover so much before it blows up.

KlangFool

KlangFool
Posts: 16556
Joined: Sat Oct 11, 2008 12:35 pm

Re: A cautionary tale about pensions and wages

Post by KlangFool » Fri Jun 26, 2020 12:07 pm

Maverick3320 wrote:
Fri Jun 26, 2020 11:46 am
KlangFool wrote:
Fri Jun 19, 2020 9:36 am
X528 wrote:
Fri Jun 19, 2020 9:18 am
KlangFool wrote:
Fri Jun 19, 2020 8:15 am
Folks,

We have a healthcare bubble and a college bubble. The bubbles have to burst sometime.

KlangFool
People primarily associate bubbles with costs (healthcare costs, real estate and tuition).

Does this apply to physician/nurse salaries (for the healthcare bubble) and professor salaries (for the college bubble) too? Are salaries in these professions going to decrease. American doctors in the U.S. are the highest paid in the world I think.

Regarding the college bubble:

https://johntreed.com/blogs/john-t-reed ... om-scratch
X528,

1) If the whole industry is going to hell, why would the salary of those working in the industry not being affected? Just look at the Telecom and Oil industries.

2) If college education is going remote, what is there to stop the top universities of the world to compete to the universities inside the USA?

KlangFool
Why would #2 be a bad thing?
Maverick3320,

I did not say that whether it is good or bad. The world would change. As usual, there will be winners and losers.

KlangFool

User avatar
celia
Posts: 10767
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: A cautionary tale about pensions and wages

Post by celia » Fri Jun 26, 2020 12:35 pm

RobLyons wrote:
Fri Jun 19, 2020 6:12 pm
TheTimeLord wrote:
Fri Jun 19, 2020 8:26 am
RobLyons wrote:
Fri Jun 19, 2020 7:32 am
We have heard you should not count pension benefits until the day you receive them, but this move has surprised some. Massachusett's largest private employer Mass General Brigham, (MGB) formerly Partners Healthcare, has decided to "temporarily" freeze all pension benefit contributions and annual pay increases to 50,000 workers, and is also cutting executive and leadership pay. This is expected to last 1 year and is the result of shortfalls due to the pandemic. Article is below.
You are going to have to help me on how this relates to the article. Is there any mentioned of benefits accrued not being honored or covered by the PBGC?
Guess I wasn't clear on what I meant here.. So I don't mean they are eliminating benefits accrued. Rather, pension contributions are frozen this year, and of course they could be frozen for another year or longer, especially if there is another wave or another financial down turn, or reduced indefinitely.. or eliminated altogether.
RobLyons, Please clarify some more.

Who makes the pension contributions, employees, employer, or both?
And what is meant by "frozen"? Temporarily discontinue or freeze at current/previous contribution levels?
And if this is only happening to 50,000 employees and executives and leadership, do the other employees continue their pension contributions as usual? How many employees do they have in total?

Northern Flicker
Posts: 5780
Joined: Fri Apr 10, 2015 12:29 am

Re: A cautionary tale about pensions and wages

Post by Northern Flicker » Fri Jun 26, 2020 1:28 pm

Pension freezes have been common for a long while. A full pension freeze usually means that all benefits already accrued become 100% vested, but no additional benefits accrue from that point forward.
Last edited by Northern Flicker on Fri Jun 26, 2020 6:17 pm, edited 1 time in total.
Risk is not a guarantor of return.

User avatar
ThereAreNoGurus
Posts: 514
Joined: Fri Jan 24, 2014 11:41 pm

Re: A cautionary tale about pensions and wages

Post by ThereAreNoGurus » Fri Jun 26, 2020 1:43 pm

X528 wrote:
Fri Jun 19, 2020 9:18 am
Regarding the college bubble:

https://johntreed.com/blogs/john-t-reed ... om-scratch
Excellent article. Thanks for posting.
Trade the news and you will lose.

User avatar
LadyGeek
Site Admin
Posts: 63733
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: A cautionary tale about pensions and wages

Post by LadyGeek » Fri Jun 26, 2020 2:08 pm

The discussion is getting derailed on education. Please stay on-topic, which is about pensions and wages.

Also, I removed an off-topic comment. As a reminder, see: General Etiquette

We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

...At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
simplesimon
Posts: 3771
Joined: Mon Feb 25, 2008 8:53 pm
Location: Boston, MA

Re: A cautionary tale about pensions and wages

Post by simplesimon » Fri Jun 26, 2020 2:44 pm

Grt2bOutdoors wrote:
Fri Jun 26, 2020 1:21 am
Morgan22 wrote:
Sat Jun 20, 2020 9:31 pm
RobLyons wrote:
Fri Jun 19, 2020 7:32 am
The system reported having more than $230 million in cash on hand during the first quarter."
This is only about 60 days worth of expenses. That's scary territory for a healthcare system. I don't blame them for trying to cut costs any way possible to survive during this time.
Two ways to build up reserves - less spending and careful long term planning. Who were the board of trustees and who was the CFO? They should be shown the door. It’s a case of thinking that the good times last forever - a sign of an inexperienced board and a CFO who was too optimistic and lacked real experience.
The original quote is a bit misleading. In addition to $230 million in cash, the system has over $11 billion in investments compared to $6 billion of interest-bearing debt.

Mass General Brigham Second Quarter 2020 Results

Grt2bOutdoors
Posts: 22541
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: A cautionary tale about pensions and wages

Post by Grt2bOutdoors » Fri Jun 26, 2020 6:14 pm

simplesimon wrote:
Fri Jun 26, 2020 2:44 pm
Grt2bOutdoors wrote:
Fri Jun 26, 2020 1:21 am
Morgan22 wrote:
Sat Jun 20, 2020 9:31 pm
RobLyons wrote:
Fri Jun 19, 2020 7:32 am
The system reported having more than $230 million in cash on hand during the first quarter."
This is only about 60 days worth of expenses. That's scary territory for a healthcare system. I don't blame them for trying to cut costs any way possible to survive during this time.
Two ways to build up reserves - less spending and careful long term planning. Who were the board of trustees and who was the CFO? They should be shown the door. It’s a case of thinking that the good times last forever - a sign of an inexperienced board and a CFO who was too optimistic and lacked real experience.
The original quote is a bit misleading. In addition to $230 million in cash, the system has over $11 billion in investments compared to $6 billion of interest-bearing debt.

Mass General Brigham Second Quarter 2020 Results
True, but more than half of that $11 billion is restricted for specific use, so figure about $5 billion is available for general use.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

User avatar
Random Musings
Posts: 5702
Joined: Thu Feb 22, 2007 4:24 pm
Location: Pennsylvania

Re: A cautionary tale about pensions and wages

Post by Random Musings » Fri Jun 26, 2020 9:16 pm

I expect private sector pensions to have more issues in the short term than public pensions as the latter can garner additional assets via taxation. If, or more likely, when that occurs, that issue will cause additional devide as the private sector workforce will have a reduction in savings potential in order to mitigate public pension shortfalls.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ

Northern Flicker
Posts: 5780
Joined: Fri Apr 10, 2015 12:29 am

Re: A cautionary tale about pensions and wages

Post by Northern Flicker » Sat Jun 27, 2020 3:14 pm

Random Musings wrote:
Fri Jun 26, 2020 9:16 pm
I expect private sector pensions to have more issues in the short term than public pensions as the latter can garner additional assets via taxation. If, or more likely, when that occurs, that issue will cause additional devide as the private sector workforce will have a reduction in savings potential in order to mitigate public pension shortfalls.

RM
State run public pensions push shortfalls through to the governmental agencies whose employees are due benefits. This could lead to a city or county bankruptcy or muni bond default.
Risk is not a guarantor of return.

MathIsMyWayr
Posts: 1740
Joined: Mon Mar 27, 2017 10:47 pm
Location: CA

Re: A cautionary tale about pensions and wages

Post by MathIsMyWayr » Sat Jun 27, 2020 5:59 pm

Northern Flicker wrote:
Sat Jun 27, 2020 3:14 pm
Random Musings wrote:
Fri Jun 26, 2020 9:16 pm
I expect private sector pensions to have more issues in the short term than public pensions as the latter can garner additional assets via taxation. If, or more likely, when that occurs, that issue will cause additional devide as the private sector workforce will have a reduction in savings potential in order to mitigate public pension shortfalls.

RM
State run public pensions push shortfalls through to the governmental agencies whose employees are due benefits. This could lead to a city or county bankruptcy or muni bond default.
Detroit: https://www.freep.com/story/money/perso ... 759446002/
California: https://www.aier.org/article/california ... sion-cuts/

anakinskywalker
Posts: 475
Joined: Sun Aug 24, 2008 8:20 pm

Re: A cautionary tale about pensions and wages

Post by anakinskywalker » Sat Jun 27, 2020 7:40 pm

Forester wrote:
Fri Jun 26, 2020 11:54 am
Paying out of the nose to attend a "place of learning" which attains some of its value from perceived prestige, seems as archaic as the 1990s shopping mall. Students go to this place then..... do much of their research online, which they could do from any location. I think the future is remote learning with occasional in-person meet ups.

Elite universities don't need to be a model rolled out to the entire population. To be frank too many young people are formally educated which creates resentment as they're weighed down by debt and there aren't enough professional jobs in the economy to employ these people. It's also anti-social because these former students who are over-qualified become a cohort of opinion which views working class people (who did not receive a higher education) with contempt.
Off topic, deleted.

Anakin

User avatar
ram
Posts: 1588
Joined: Tue Jan 01, 2008 10:47 pm
Location: Midwest

Re: A cautionary tale about pensions and wages

Post by ram » Sun Jun 28, 2020 12:08 pm

Healthcare has been significantly affected by the current epidemic.
Many healthcare systems have done one or more of the following:
-Decreased salaries.
-Stopped 401 K contributions.
- Stopped pension contributions.
- Reduced worker hours.
-Enacted hiring freezes.
I have been in healthcare for more than 25 years and this is the biggest salary decline that I have seen personally. However I believe that long term healthcare offers some of the best job stability. Most of the financial hardship is from voluntarily decreasing elective healthcare to decrease the spread of the virus.

Somebody upstream has pointed out that we spend a lot on healthcare which is true. But as a country gets richer there is only so much one can spend on food. According to USDA’s Economic Research Service, in 2018 Americans spent an average of 9.7% of their total disposable income on food at home and food away from home.
https://www.fb.org/market-intel/u.s.-fo ... and-abroad

US spends 17.7% GDP on healthcare.

Poorer countries spend much less on healthcare. Nigeria spends 3.8% of its GDP on healthcare. https://www.statista.com/statistics/112 ... %20percent.
56% of Nigerian household income is spent on food.

Though commonly lamented on this board healthcare and education are likely to consume sizable portions of household expenditures in US in the foreseeable future. I have not heard of anybody dropping out of prestigious colleges because teaching is mostly online for the next semester.
Ram

Topic Author
RobLyons
Posts: 736
Joined: Tue Oct 31, 2017 12:55 pm

Re: A cautionary tale about pensions and wages

Post by RobLyons » Sun Jun 28, 2020 4:59 pm

celia wrote:
Fri Jun 26, 2020 12:35 pm
RobLyons wrote:
Fri Jun 19, 2020 6:12 pm
TheTimeLord wrote:
Fri Jun 19, 2020 8:26 am
RobLyons wrote:
Fri Jun 19, 2020 7:32 am
We have heard you should not count pension benefits until the day you receive them, but this move has surprised some. Massachusett's largest private employer Mass General Brigham, (MGB) formerly Partners Healthcare, has decided to "temporarily" freeze all pension benefit contributions and annual pay increases to 50,000 workers, and is also cutting executive and leadership pay. This is expected to last 1 year and is the result of shortfalls due to the pandemic. Article is below.
You are going to have to help me on how this relates to the article. Is there any mentioned of benefits accrued not being honored or covered by the PBGC?
Guess I wasn't clear on what I meant here.. So I don't mean they are eliminating benefits accrued. Rather, pension contributions are frozen this year, and of course they could be frozen for another year or longer, especially if there is another wave or another financial down turn, or reduced indefinitely.. or eliminated altogether.
RobLyons, Please clarify some more.

Who makes the pension contributions, employees, employer, or both?
And what is meant by "frozen"? Temporarily discontinue or freeze at current/previous contribution levels?
And if this is only happening to 50,000 employees and executives and leadership, do the other employees continue their pension contributions as usual? How many employees do they have in total?

Employer makes the contributions
Temporarily d/c'd
50k is the total employees company wide I believe
"Great parenting sets the foundation for a better world"

TechFI
Posts: 85
Joined: Fri Jun 05, 2020 12:07 am

Re: A cautionary tale about pensions and wages

Post by TechFI » Mon Jun 29, 2020 2:23 am

This why pension plans are inferior to defined-contribution plans, despite the mythos around pensions.

They are subject to legislation and other type of risks that you cannot control. In short, your fate is not in your hands.

This reminds me of another incident involving a UK pension fund. Employees sued after they cut payments. Employees won. Few years later, the pension fund was bankrupt. Everyone lost.

RJC
Posts: 563
Joined: Fri Dec 14, 2018 1:40 pm

Re: A cautionary tale about pensions and wages

Post by RJC » Mon Jun 29, 2020 7:33 am

X528 wrote:
Fri Jun 19, 2020 4:22 pm
anakinskywalker wrote:
Fri Jun 19, 2020 2:50 pm
JonnyB wrote:
Fri Jun 19, 2020 1:21 pm
MathIsMyWayr wrote:
Fri Jun 19, 2020 12:12 pm
Any illusion of job security or rosy future benefits such as pension is just an illusion. No employer can guarantee such things in the real world. It is not the fault of the employer. It is simply not sustainable. Any guarantee for the future is nothing but kicking the can down the road. I like a job security and a cushy pension, but the reality cannot support such a fantasy.
There's no fantasy about it. Actuarial tables are quite accurate, even projecting out decades. An employer can know with quite precision exactly how much money they need to pay out and when.

The problem comes when employers fail to fund their pensions adequately given the accurate information they are provided. That isn't a failure of the pension system. That is a failure of management.

Many of the pension problems occur because managers cut their pension funding when times are good, relying on stock market increases. And likewise they cut funding when times are bad because they say they can't afford it now. That's just bad management.

Saying that pensions are a fantasy is just providing an excuse for larcenous managers.
Larceny is human nature. That's why pensions are a terrible idea and 401ks are a much better approach.

People should be able to control their own destiny.

Anakin
Having both a pension and a 401k is good too.

Would a federal government FERS pension be viewed the same way? Fed. employees also have the TSP (which is like a 401k).
I'm pretty sure you can depend on a Federal Gov't pension. Does anyone know if there ever was a time when federal gov't benefits were pulled back (in a meaningful way) while someone was still working under that plan?

gr7070
Posts: 1133
Joined: Fri Oct 28, 2011 10:39 am

Re: A cautionary tale about pensions and wages

Post by gr7070 » Mon Jun 29, 2020 11:33 am

RJC wrote:
Mon Jun 29, 2020 7:33 am
I'm pretty sure you can depend on a Federal Gov't pension. Does anyone know if there ever was a time when federal gov't benefits were pulled back (in a meaningful way) while someone was still working under that plan?
I presume federal pensions have been similarly eroded like state and municipal pensions have. Typically the defined benefit is reduced and/or qualifications increased, as well as, employee contribution increased.

This usually comes with no or little impact to current retirees. Thus the pyramid scheme comparison.

This has, largely understandably, occurred throughout the US for decades. I assume federal pensions haven't been immune to this, though, I don't have specific knowledge.

Having said that, I would think it's the beyond insanely rare case where a government pension benefit isn't honored though. They are about as safe a vehicle as there is. However, they are not fool proof and some risk does exist.

I'm sure others will offer verified federal pension reductions and the few government pension defaults.

MNSooner
Posts: 5
Joined: Sun Jul 05, 2015 5:46 am

Re: A cautionary tale about pensions and wages

Post by MNSooner » Mon Jun 29, 2020 2:03 pm

gr7070 wrote:
Mon Jun 29, 2020 11:33 am
RJC wrote:
Mon Jun 29, 2020 7:33 am
I'm pretty sure you can depend on a Federal Gov't pension. Does anyone know if there ever was a time when federal gov't benefits were pulled back (in a meaningful way) while someone was still working under that plan?
I presume federal pensions have been similarly eroded like state and municipal pensions have. Typically the defined benefit is reduced and/or qualifications increased, as well as, employee contribution increased.

This usually comes with no or little impact to current retirees. Thus the pyramid scheme comparison.

This has, largely understandably, occurred throughout the US for decades. I assume federal pensions haven't been immune to this, though, I don't have specific knowledge.

Having said that, I would think it's the beyond insanely rare case where a government pension benefit isn't honored though. They are about as safe a vehicle as there is. However, they are not fool proof and some risk does exist.

I'm sure others will offer verified federal pension reductions and the few government pension defaults.
The pensions of Uniformed Services personnel were recently reduced from 2.5% of base pay/year of service (typically with a minimum of 20 years to qualify), down to 2%/year of service. A tsp match was added. New personnel must accept the new system, while more senior ones had the option to continue with the old system. Already retired members were grandfathered in to the old system, but now have an added enrollment fee for health care coverage.

novemberrain
Posts: 271
Joined: Wed May 09, 2018 12:26 pm

Re: A cautionary tale about pensions and wages

Post by novemberrain » Wed Jul 01, 2020 12:56 pm

KlangFool wrote:
Fri Jun 19, 2020 8:15 am
Folks,

We have a healthcare bubble and a college bubble. The bubbles have to burst sometime.

KlangFool
Agree. But I like to add that we also have a real estate bubble (because of govt subsidized home loans), a finance bubble (because of frequent bailouts) and maybe a tech bubble (because of lax anti-trust).

Post Reply