The New Beginning

In the beginning I was born........Now some would say, "You're born, you live, and then you die!" I guess right now I'm in the living part. When I get to the Die part you'll surely know, as here will no longer be any posts!

So here we are "living" Would you really call it that? With the economy the way that it is, the high un-employment rate, the rising food prices, and listening to all of the know it all's who actually know nothing, and continue to stir the pot upsetting many others. Like today, I was listening to the radio and the commentator was commentating on how he thought that the state and municipal pensions should be changed over to 401K plans and the employees should contribute and save the state money.

The reality of it is that the employee's DO contribute to the pension plan, up to 10% of their income. If an employee worked for 50K a year for 30 years he would have contributed $150,000 of his own money. Add the compounded interest the money would earn over that time and it would be substantially higher. Pay out $30,000 a year, and it would only last five to seven years. So lets say it lasts ten years, after compounding. If he retires at 55 it would run out when he was 65. But what about the employers contribution? Would that give him another ten to fifteen years? I know pensions do not exactly work this way but I'm trying to paint a picture here for you to think about.

Now as usually is the case, these employees might be covered by a union "CONTRACT", where at one time, both parties sat down at a bargaining table and negotiated a deal. Included in those negotiations, pension contributions were covered and agreed on. Because of these agreements, other employees (those not covered by a union) were also benefactors of these agreements, as they were also given to them, although maybe not in quite the same fashion or amounts.

So here we have Party A (the employee) and Party B (the employer) agreeing on something, signing the bottom line of the agreement, and Party A starts to make contributions from their pay checks to the "PLAN"
What about party B though? Don't they have to put their bargained share also into the plan? Well not always. They (the employers) say sometimes they do not have the money, or they took money out because they needed it for something else. Who is the one that is cheated here? The Employee or the Employer. What the State legislators do to their employees is illegal in the private sector. In the private sector, the "PLAN" must be funded by law. When an employer does not do that it is a criminal violation. But the employee is protected by the PBGC or the Pension Board Guarantee Corporation, which is a Federal Government entity. Each and every private pension plan must file a form 5500 with the PBGC that lists all assets and liabilities of the plans. So you see the legislators have engineered themselves an out of this responsibility by exempting themselves from the laws that everyone else has to follow.

I think I have the simplest solution of all of the suggestions and crap being tossed around. Here it is.....as of January First, any municipal or state or government employee WILL BE COVERED BY SOCIAL SECURITY JUST LIKE EVERYONE ELSE! If the laws don't allow it, then change the laws. Through attrition those already in the plan will continue until they are retired. But the existing plan will be frozen, and off the bargaining table for the future negotiations. If the employees want to bargain for an additional 401K plan that's OK, but just as in the private sector, there are administration fees they would have to pay for having it.

Next Week:  Why do we have so many political talk shows?