First of all, my disclaimer. I am a government employee.
I hope that someone can answer my questions and clear up my thoughts. We hear about government pensions being underfunded.
When these pension plans are calculated, why aren’t the long term costs revealed during contract negotiations?
Why shouldn’t the agency that employed the employee be responsible for the full retirement costs (and any makeup expenses) than expecting the retirement fund to make it up? Some agencies promise full retirement medical, and others don’t. Why is that? How come one agency can “afford” that expense, while another can’t?
What brings this up? Well, the huge salaries at the city of Bell. Who is really going to pay for those pension benefits? I doubt that Bell will be (But I could be wrong). I believe that the agency that allowed the salary should be responsible for the pension. If they cannot fully fund it, then that agency should be held responsible.
Part of the ongoing financial crisis that we are facing within the government is the failure to actually calculate the long term costs of retirement benefits upfront. Maybe if agencies knew that they would have to cover any shortages (based upon what was promised to the employee) instead of relying on the taxpayer to make it up (Yes, I know, the taxpayer makes it up either way, but I’m talking about more fiscal responsibility). Yes, I know that there are many factors and variables involved, but I’m sure the actuaries can give us a very reliable estimate.
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Roger, are you talking about the agency picking up the full cost, with the employee not picking up any of the cost? We don’t believe that’s what you are suggesting…and it’s clearly not what you wrote. You are asking about the agencies picking up the costs vs. the pension fund (which deserves an answer to your question, from an actuarial standpoint). Yet, at least one Tweet-er has already misconstrued your post to imply that “we” (as in Rostra) is calling on all pension costs being picked up by the taxpayer, as opposed to the employee.
“Conservative blog @sandiegorostra says taxpayers should pick up all pension costs (‘any any makeup expenses’)” … First tweeted by @RickyWhy
First of all, that is “Poway Roger”, not just “Roger”.
What I’m stating is that the full cost for the pension be explained (Actuaries can do it – They are quite good) during labor negotiations. If the stated employer (Government agency) and employee contribution will still underfund the employee pension, then that needs to be explained and a remedy be made.
What I was trying to say (Well, at least it was in my head, and maybe not exactly written down as such), is that actual employee retirement costs must be calculated when labor agreements are made. If they are being underfunded by the agency, then the agency should make up the difference because of their inability to calculate the true costs (So in other words, for example, you have the pension for the city manager for Bell. I seriously doubt that what the city and he pays into CalPers will cover his pension. So, if a prior agreement for the employee or maybe an employee-employer partnership for both to make up the difference hasn’t been made, then I believe that the employer (Agency) should make up the difference because of their ignorance to see the real costs. Why must CalPers, or whatever government retirement agency it might be, be forced to pass those extra costs to their other agencies that are part of the retirement system.).
The question, once again, is where is the accountability? How can we promise so much, but find inadequate funding? Why can the City of San Diego, for example, get away with underfunding their pension? Sooner or later, it will come back to haunt you.
Sadly, as I see it, for the most part, these retirement systems almost seem like a ponzi scheme – They are counting on future employees to pay for the retirement of current retirees and current employees. But part of the problem is we all like the promises, but fail to look at the bottom line.