Monday, December 12, 2011

Pension News: DC Double Dipping and $174k at 59

1. Double Dipping in DC -- "More than two dozen retired police officers who were rehired by the District, including the chief of the police agency that protects government buildings, have been improperly paid both a full pension and full salary for several years even though the D.C. Code prohibits that, according to city documents and interviews with officials. For retired cops, firefighters, and teachers who return to the city workforce, city law requires that their salaries be offset by their pensions. 

HR Director Shawn Stokes says she asked her staff to identify whether any retired, then rehired, employees were double dipping improperly. So far, her staff has identified 25 retired MPD officers who have come back to work for the city and drawn both a full salary and a full pension. The city’s records don’t make it easy to identify double dippers: “It could be more,” said Stokes."

2. CNBC -- "After nearly 40 years in California public education, Patrick Godwin spends his retirement days relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life

Such guaranteed pensions for relatively youthful government retirees — paid in similar fashion to millions nationwide — are contributing to nationwide friction with the public sector workers. They have access to attractive defined-benefit pensions and retiree health care coverage that most private sector workers no longer do.

Experts say eligible retirement ages have fallen over the past two decades for many reasons, including contract agreements between states and government labor unions that lowered retirement ages in lieu of raising pay." 

MP: Must be nice when your pension puts you comfortably in the richest "top 5%" ($154,000 minimum income in 2009 according to IRS data,or the top 8% according to this WSJ website) of Americans.... in retirement... for not working!  And the substitution of lower retirement ages for higher pay, when both aren't possible, illustrates just one example of the excess that motivated Wisconsin to end most collective bargaining for unionized public employees.

(Thanks to Bob Wright for the second article.)

20 Comments:

At 12/12/2011 2:49 PM, Blogger jorod said...

In Chicago they go to airport security for another salary and pension.

 
At 12/12/2011 2:53 PM, Blogger Benjamin said...

I'll say it again: All public pensions, from civilian to military, need to end.

They are time bombs for taxpayers. The ultimate kick-it-down-the-road tax time bomb.

Imagine retiring after 20 years, with full pension and full medical. I just described the uniformed federal employee.

 
At 12/12/2011 3:05 PM, Blogger Buce said...

Be interesting to know how much of this is drawing on a fund that built up over their career as part of the comp package, how far a general fund liability. If it is the former, the real fight is between older retirees and youngsters--whether the old guys are slant-drilling into the young guy's wells. If (and insofar) as it is the latter, ain't gonna happen--one way or the other the taxpayers are going to wiggle out of funding it. Though I expect when the dust settles, cops and prison guards will suffer the least. Maybe they can use some of the boodle to fund Ron Paul.

 
At 12/12/2011 3:17 PM, Blogger Paul said...

"I'll say it again: All public pensions, from civilian to military, need to end."

Only a buffoon like Benji would equate the hard life in the infantry with the experience of warming a chair for some parasitic bureaucracy.

 
At 12/12/2011 4:32 PM, Blogger jcarroll1948 said...

"Imagine retiring after 20 years, with full pension and full medical. I just described the uniformed federal employee."

Benjamin. Military personnel receive 50% of the average of the highest 3 years of their base pay (does not include housing pay, subsistence pay, and other incentives such as flight pay if one is rated) after 20 years, not total pay. It works out to 1/3 or less of total pay, which isn't bad, but is far less than you incorrectly state. And also, don't forget, the career military guy has lived with being put in danger at the whim of the commander-in-chief for his entire career and quite a few do not get anything except 6 feet of earth for their contributions.

You are entitled to your own opinions, but not your own facts.

 
At 12/12/2011 5:14 PM, Blogger Steve Hamlin said...

Agree that both situations are absurd. However, $174,308 = top 8%. Top 1% is $509,000 in household income per year.

Source: http://blogs.wsj.com/economics/2011/10/19/what-percent-are-you/

 
At 12/12/2011 5:35 PM, Blogger Benjamin said...

J Carrol/Paul-

And what percent of uniformed veterans served in combat, and for how long? Are you counting the drone operators in Nevada? The supply sergeants in Montana? The clerk-typists in Germany?

And I said uniformed veterans qualify for full pension, after 20 years. That is correct.

It has been accurately described as a $1 million pension. That is not even counting VA.

No private-sector employer, even Blackwater, offers such fat pensions and benefits.

I am saying let's up the military pay, hire guys in for 10 years, and then up or out. Mostly out.

Or, go back to citizen-soldiers for the most part, as our Founding Fathers wanted.

The taxpayers and solving the federal deficit must come first. An utterly bloated, parasitic, coprolitic Pentagon can take a second seat for a few decades. They are becoming an increasingly unimportant tax-supported agency.

 
At 12/12/2011 6:25 PM, Blogger Buddy R Pacifico said...

"The city’s records don’t make it easy to identify double dippers: “It could be more,” said Stokes."

Don't city records include an employment application that shows previous employers and dates of employment? Then it's not too hard to figure out. Duh.

 
At 12/12/2011 6:46 PM, Blogger Walt G. said...

It's easy to get around rules that prohibit employing former workers drawing pensions from working for the same employer. A company that performs the needed service is formed and hires the employee and then the employer subcontracts that work out to the new company.

This method has survived court challenges in the auto industry with backpay awarded to employees who were not hired who could prove superior qualifications over the people who were hired.

Often it is cheaper to hire someone already trained than train a new employee. In many cases, employee buyouts happen quickly without anyone trained to take their place. Doesn't it make sense for experts with unique knowledge to train their own replacements?

Of course, abuses of any system can happen and should be addressed, but all possible situations cannot be judged by those abuses.

 
At 12/12/2011 6:52 PM, Blogger PeakTrader said...

Buddy, you're assuming the bureaucracy of government is at least as good as the bureaucracy of GM before it went bankrupt :)

 
At 12/12/2011 6:58 PM, Blogger Walt G. said...

Peaktrader,

Tracking employment through Social Security numbers is pretty simple for both the government and GM. I doubt either one pays many workers under the table.

 
At 12/12/2011 7:47 PM, Blogger Duncan said...

people will always take full advantage of any siutation presented. the problem with govenment is the mechanism to set prices for labor are thwarted. so some benefit more than they should, like this person, and many more are worse off, like the tax payers and competing labor.

 
At 12/12/2011 8:35 PM, Blogger VangelV said...

MP: Must be nice when your pension puts you comfortably in the richest "top 5%" ($154,000 minimum income in 2009 according to IRS data,or the top 8% according to this WSJ website) of Americans.... in retirement... for not working! And the substitution of lower retirement ages for higher pay, when both aren't possible, illustrates just one example of the excess that motivated Wisconsin to end most collective bargaining for unionized public employees.

This is not sustainable. Most cities and the states are bankrupt. Eventually these employees will have to settle for much less.

 
At 12/13/2011 3:47 AM, Blogger randian said...

I would estimate the likelihood that the illegal double-dippers in DC will be forced to disgorge their ill-gotten gains at approximately 0%.

 
At 12/13/2011 7:20 AM, Blogger Walt G. said...

Don't forget that a lot of retired employees have valuable experience, training, and credentials, and many of these jobs have to be filled by someone such as that. What do you do if given a choice of rehiring a seasoned employee that you don't have to pay benefits or spend thousands of dollars to train and years to train or hiring someone new?

There are two problems here: 1) pensions and retiree health care were not funded when times were better, but they are still owed as deferred wages, and the employees are qualified to collect them, and 2) someone still has to do these jobs.

Setting any emotion aside, the best solution may be to separate the two problems and hire the person who adds the most value to the job in both the short and long term regardless of who that might be. Many cities and townships are currently having to restudy their policies of not rehiring retired employees because it is just too expensive to enforce. Often the person who adds the most value and applied for the job cannot be hired and a person much less qualified and much more expensive must be hired. Making smart hiring decisions might not make you popular; however, not rehiring retired employees could be shooting yourself in the foot and costing a lot of unnecessary expense.

 
At 12/13/2011 7:29 AM, Blogger anni said...

I like the pension system..But unfortunately the government in India has cancelled that..
real estate degrees

 
At 12/14/2011 1:21 AM, Blogger OBloodyHell said...

>>> Eventually these employees will have to settle for much less.

Only after a lot of lawyers have feathered their mansions with state, local, and federal taxpayer funds.

 
At 12/14/2011 1:25 AM, Blogger OBloodyHell said...

>>> Making smart hiring decisions might not make you popular

One form of smart hiring decision is to grasp that the employee in question ought to be willing to work for notably less money than their prior salary or the "going rate" for that job.

You can take a job you know and know you like for 70 cents on the dollar (while keeping your full pension as well), or you can go find another job.

THEN you might argue that the venue is getting its money worth.

And if they don't think that's fair, well, the venue can tell them to take a hike.

 
At 12/14/2011 1:26 AM, Blogger OBloodyHell said...

In reality, the problem is that the system ought to be privately funded all around. Then people are getting paid out of an actuarially based system and not a standardized government Ponzi scam.

 
At 12/14/2011 7:36 AM, Blogger Walt G. said...

OBloodyHell,

The hiring manager should hire the best person for the job regardless of outside factors such as pensions or how many other assets a potential employee has because that is the hiring manager’s job. As always the case, the employee should be compensated by a mutual agreement using an oral or a written contract.

When you limit the available options when making any decision, your do not always have an optimum outcome. Would you seriously consider not allowing an option for what might be the most qualified and economical job candidate by eliminating a qualified retired employee? Jealousy at what someone else has should not drive business decisions.

The funding sources for retired and active employees fall under two different areas of accounting responsibility. Do you really want to create a problem of hiring the second best qualified person and spending extra money to train and give him or her experience to make up for a poorly conceived or underfunded pension plan? How do you solve an old problem by creating a new problem?

 

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