The Scituate Pension Forum
Carroll Andrew Morse
The Scituate Democratic Town Committee held a forum on Wednesday evening, where Rhode Island General Treasurer Gina Raimondo, current Pension Commission member (and Scituate Resident) Ernest Almonte and State Representative Michael Marcello answered questions about pension reform. They didn't discuss specific proposals that might go before the legislature next month, but Treasurer Raimondo did say at one point during the event that she anticipates litigation to result, suggesting that she expects the eventual implementation of something more than a minimal plan for reamortization and new rules for new hires.
Of course, the recommendations of the State Treasurer as well as the output of the pension commission are strictly advisory; the final decision about what type or pension reform occurs (or not) rests with the legislature and the Governor. For his part, Rep. Marcello said he would like to see a real solution that doesn’t require continuing adjustment to be achieved this fall.
You can hear for yourself excerpts of what the panel members said, by clicking the audio links below.
Setting up the problem in big-picture terms...
Ernest Almonte: "In a business, if you have a pension fund that's less than 80% funded, there are additional requirements that are put in place. You can't give additional benefits to the employees or the retirees...let's look at our town [Scituate]; it's about 24% funded..."
| Audio 49 sec |
| "The Federal Government has severe financial problems. They are going to have to fix their problems, which means there's going to be less money for states and cities and towns to solve their problems, and they're not in the mood to solve state problems...We're going to have to solve the problem ourselves..." | Audio 1m 6 sec |
Response to a question about whether the current crisis is the result of the state not making it's legally required contributions...
| Gina Raimondo, "The state has made it's annual contribution every year, [with the exception of] a couple of years in the early 90s during the DEPCO crisis...that is less than 1% of the problem..." | Audio 33 sec |
The next several items are responses to different versions of the question asked by several audience members of why teachers and state workers should have to experience any significant changes in their pensions, when they contributed according to the schedules they were given and made long-term plans based on payouts they were promised...
Gina Raimondo: "We can't keep pretending we don't have a problem, or keep pretending that the math is better than it is. This state started this system in the 1930s. It did not do an actuarial study until the late 80s..."
| Audio 2m 4 sec |
"Average wage in Rhode Island is $41,000. Unemployment is still extremely high. Taxes, in my view, are about as high as they can go....Comprehensive pension reform is in everyone's interest. If you are a taxpayer, you need to get behind this. If you are a teacher who is working hard every day to educate our children and serving our community, you need to get behind this. Because it is in no one's best interest to have a plan that runs out of money or to have more bankruptcies in this state..."
| Audio 1m 40 sec |
"...10 cents of every tax dollar goes into the pension. That is double what it was in 2003. It's going to double again in the next six years if we don't fix it and continue to go up from there. So the taxpayer is sharing in this burden, and will continue to share, as they should..."
| Audio 3m 19 sec |
Ernest Almonte: "One thing I want to add to the teachers...You taught us all so well, we figured out that the numbers don't work...and you also taught us that we should look out into the future and not just solve things for today..."
| Audio 1m 48 sec |
| Michael Marcello: "I know there are state workers who are hard workers and who do a good job. Unfortunately, the benefits you were promised were not funded they way they should have been...this is not the fault of state workers. They did everything they were asked to do, but the contributions that you are putting in are flat...and we are literally out of money, and I fear if we do not correct it within a year or two years, the problem will only get bigger..." | Audio 1m 34 sec |
Response to a question about pension-related lawsuits...
| Gina Raimondo, "There is pending litigation...I expect that with almost any reform we enact, there will be some form of litigation. It's not a reason not to go for this...It is the state's position that there is no contract and therefore, legislation can be enacted..." | Audio 1m 34 sec |
Response to a question about state pensioners taking other government jobs...
| Michael Marcello, "My personal preference is that if you have a state pension and you go to work for a municipality, you should be put into a different type of system..." | Audio 1m 28 sec |
I have a few questions about the whole pension mess:
1. Has anyone collected data to indicate how much in dollars has been or should have been put in per person (by employee contributions & the matching government contributions) and what the total of that is for someone who retires at 20, 30, 40 years of service? Because, the way I see it, these systems were designed when people were living much shorter lives. If someone works for 20 years and contributes $X and the government matches it, how long can that person reasonably expect to collect a pension?
2. Once "vested" is it the state's (taxpayers) responsibility to keep paying out even if someone lives and collects well beyond what their contributions were in total?
3. How can the system possibly ever be sustained if someone works and pays in for twenty years, but collects for 40+ years?
I'm not a math person, but there is so much talk of "fairness" with all of these pension discussions. How much is fair to expect? How much is fair to pay? And why hasn't anyone been asking these questions?
"3. How can the system possibly ever be sustained if someone works and pays in for twenty years, but collects for 40+ years?"
I've been asking this very same question for a while now.
Yes compound interest (on the investment end) is a very nice thing, but how much money would you have to contribute for those 20 years, to be able to draw for 40 years?
Say someone has a $50,000 pension ( I personally know someone who will have a HIGHER pension than that, he's a Fire Fighter), and he retires at age 45 ( which he will be eligible to do). If he collects for 40 years ( a definite possibility), the total payout (NOT including any medical benefits mind you) would be $2,000,000.
I've been contributing at least 10% of my salary into my 401K for the last 15 years and I'm NOWHERE NEAR $1,000,000, nevermind $2,000,000.
How much would my employer have to contribute during those 20 years to get my balance up to $2,000,000 ??
Nowhere in Rhode Island is there a Firefighter who is eligible for a fifty thousand dollar pension at age forty-five.
Michael, does your statement include disability pensions? Because close to 60% of the retirees from your department collect disability pensions.
Go ahead, call me a liar, Tom. I have the numbers and I prove you wrong every time.
"Bucket Chick", I agree with you that the system was and is not designed to pay out for 40 years. That's the biggest part of the problem. The best solution, as mentioned by others, is to tie the retirement age to social security, eliminate or reduce COLA's and require an employee to work at least 30 years before being eligible for a pension. However, to be fair to the people who are already retired, I don't believe the state will be able to reduce pension benefits for people who already collecting them. How do you tell people who have been retired 5 years, 10 years or longer that they now must take a reduction in their pension? With the exception of police/fire disability pension and teacher pensions, the average pension for a retired state employee is less than $30,000 per year. These aren't people who are wealthy.
Richard - Most of them are collecting disability in an obvious scam that the entire department continues to turn a blind eye toward, but even aside from that issue, $30k pension is a lot of money when you were able to make over $100k/year spiking your overtime. And it's not like they have nearly the same expenses of a younger worker (mortgage, kids in college, etc.). Many of them start new careers while collecting their pensions as well. Current "retirees" should absolutely share the pain - they created most of it.
Richard, I agree with almost everything you said. I guess my problem (confusion?) comes from the whole
"How do you tell people who have been retired 5 years, 10 years or longer that they now must take a reduction in their pension?"
And just so there is no misunderstanding, I am being sincere with what I am about to say, and not sarcastic or antagonistic.
How do you ask all of the taxpayers that weren't of voting age or who have yet to be of voting age to just suck it up because these things were all decided years ago? We're all going to be forced to pay for the decisions that, in some cases, former politicians and labor leaders made way before we had any say in the matter. How is that fair?
I don't want to see the government break promises to the elderly retirees, but I also don't want to see elderly (non public workers) people lose their homes because of collusion that never should have happened in the first place. Nor do I want people like myself (just about to be married for the first time, no children, not receiving any social services, owns a home - obviously in the bucket) have to absorb any more tax hikes when I don't feel like I get a whole lot out of my tax dollars already. I've had some type of job since the day I got my driver's license (prior to that I babysat). I want fairness FOR EVERYONE. I just don't feel like the whole pension discussion is really considering "The Others" who aren't involved in getting a pension, but only paying for them. We're out there too.
And, just so there is no confusion - although I am just getting married for the first time, I'm actually in my forties, so I have been contributing taxes for quite some time. Lifelong resident of RI, Homeowner for over ten years.
Bucket Chick - Use getting married as an opportunity to move to a sane state and start over. Don't do it to yourself - buy a house somewhere else. New Hampshire is more liberty-oriented and right next door, or you can certainly find a job in Virginia. You have no idea how much better life is when you cut yourself free from all the leeches in RI.
Wouldn't you like to open the newspaper one day and not see a politician going to jail, some fireman or cop scamming the pension system, and a story about how the state is drowning in debt all on the front page? That stuff drains you, and not just in the monetary sense. I open the paper here and the stories are actually pleasant. Why choose to live in the most corrupt, bankrupt state in the union? You have 49 others to choose from.
Dan,
I think about moving all the time, but mostly just over the border to MA. My whole family is here, and we'd like to try for a baby (too personal, probably, sorry). But, I was SO fortunate to grow up with a huge extended family around me, I would hate to deny my potential child that kind of big, loving environment that I am absolutely distressed at the idea of moving far away. That's the thing, these issues, as personal as they are for the people whose pensions are in "jeopardy," are just as personal to the rest of us! I just don't get a sense of urgency or resolution on the part of anyone involved to take "the others" into serious consideration. We all should count. This "fight" of public workers versus non-public workers is a false construct. We all should be working towards a fair resolution that considers where we're all coming from. I have teachers, police, firefighters and miscellaneous public workers in my own family and among my dearest friends. I neither hate nor vilify them. I want them to be able to live and thrive - but not at the expense of me and my non-public worker family and friends. I just want reasonableness and fairness for all of us.
If you don't want to move far away, New Hampshire or even Massachusetts might be a better option than moving South. You could still live 30-60 minutes away from all of your family, but with lower taxes, probably a better job, and less aggravation (MA isn't much better in that regard though).
I understand that it's hard to leave family, but somebody has to break the vicious cycle or the corruption and tax shakedowns will continue. I'm sure you don't want your child to grow up in a state with garbage public education, high taxes, and no jobs, but that's all that RI has to offer the young people left in the state. It broke my heart to leave my home state and my family too, but I couldn't stay and be a victim any longer, and it's immoral to subsidize corruption with your tax dollars through inaction. I'm also going to try to start a family in the next few years and I didn't want my kids to grow up being governed by the mob like I was. I want them to learn that hard work and merit are rewarded, and they could never learn that in RI.
I think that when considering the whole pension mess, it would be useful to distinguish those pensioners who are actually relying on their pensions to get by - I don't want to take food out of anyone's mouth for heaven's sake. But let's not forget, that there are plenty of people who are collecting multiple pensions or collecting a pension and also working. I would agree to a "sliding scale" of pain, so to speak. I understand that promises were made, but I don't think it should be forgotten that pensions were meant to care for those who were too old or infirm to work. That is not what is going on these days.
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I have a few questions about the whole pension mess:
1. Has anyone collected data to indicate how much in dollars has been or should have been put in per person (by employee contributions & the matching government contributions) and what the total of that is for someone who retires at 20, 30, 40 years of service? Because, the way I see it, these systems were designed when people were living much shorter lives. If someone works for 20 years and contributes $X and the government matches it, how long can that person reasonably expect to collect a pension?
2. Once "vested" is it the state's (taxpayers) responsibility to keep paying out even if someone lives and collects well beyond what their contributions were in total?
3. How can the system possibly ever be sustained if someone works and pays in for twenty years, but collects for 40+ years?
I'm not a math person, but there is so much talk of "fairness" with all of these pension discussions. How much is fair to expect? How much is fair to pay? And why hasn't anyone been asking these questions?
Posted by: Bucket Chick at September 8, 2011 10:34 PM"3. How can the system possibly ever be sustained if someone works and pays in for twenty years, but collects for 40+ years?"
I've been asking this very same question for a while now.
Yes compound interest (on the investment end) is a very nice thing, but how much money would you have to contribute for those 20 years, to be able to draw for 40 years?
Say someone has a $50,000 pension ( I personally know someone who will have a HIGHER pension than that, he's a Fire Fighter), and he retires at age 45 ( which he will be eligible to do). If he collects for 40 years ( a definite possibility), the total payout (NOT including any medical benefits mind you) would be $2,000,000.
I've been contributing at least 10% of my salary into my 401K for the last 15 years and I'm NOWHERE NEAR $1,000,000, nevermind $2,000,000.
How much would my employer have to contribute during those 20 years to get my balance up to $2,000,000 ??
Posted by: stuckhereinri at September 9, 2011 11:53 AMNowhere in Rhode Island is there a Firefighter who is eligible for a fifty thousand dollar pension at age forty-five.
Posted by: michael at September 9, 2011 3:25 PMMichael, does your statement include disability pensions? Because close to 60% of the retirees from your department collect disability pensions.
Go ahead, call me a liar, Tom. I have the numbers and I prove you wrong every time.
Posted by: Dan at September 9, 2011 3:50 PM"Bucket Chick", I agree with you that the system was and is not designed to pay out for 40 years. That's the biggest part of the problem. The best solution, as mentioned by others, is to tie the retirement age to social security, eliminate or reduce COLA's and require an employee to work at least 30 years before being eligible for a pension. However, to be fair to the people who are already retired, I don't believe the state will be able to reduce pension benefits for people who already collecting them. How do you tell people who have been retired 5 years, 10 years or longer that they now must take a reduction in their pension? With the exception of police/fire disability pension and teacher pensions, the average pension for a retired state employee is less than $30,000 per year. These aren't people who are wealthy.
Posted by: Richard at September 9, 2011 7:50 PMRichard - Most of them are collecting disability in an obvious scam that the entire department continues to turn a blind eye toward, but even aside from that issue, $30k pension is a lot of money when you were able to make over $100k/year spiking your overtime. And it's not like they have nearly the same expenses of a younger worker (mortgage, kids in college, etc.). Many of them start new careers while collecting their pensions as well. Current "retirees" should absolutely share the pain - they created most of it.
Posted by: Dan at September 9, 2011 7:59 PMRichard, I agree with almost everything you said. I guess my problem (confusion?) comes from the whole
"How do you tell people who have been retired 5 years, 10 years or longer that they now must take a reduction in their pension?"
And just so there is no misunderstanding, I am being sincere with what I am about to say, and not sarcastic or antagonistic.
How do you ask all of the taxpayers that weren't of voting age or who have yet to be of voting age to just suck it up because these things were all decided years ago? We're all going to be forced to pay for the decisions that, in some cases, former politicians and labor leaders made way before we had any say in the matter. How is that fair?
I don't want to see the government break promises to the elderly retirees, but I also don't want to see elderly (non public workers) people lose their homes because of collusion that never should have happened in the first place. Nor do I want people like myself (just about to be married for the first time, no children, not receiving any social services, owns a home - obviously in the bucket) have to absorb any more tax hikes when I don't feel like I get a whole lot out of my tax dollars already. I've had some type of job since the day I got my driver's license (prior to that I babysat). I want fairness FOR EVERYONE. I just don't feel like the whole pension discussion is really considering "The Others" who aren't involved in getting a pension, but only paying for them. We're out there too.
Posted by: Bucket Chick at September 9, 2011 9:43 PMAnd, just so there is no confusion - although I am just getting married for the first time, I'm actually in my forties, so I have been contributing taxes for quite some time. Lifelong resident of RI, Homeowner for over ten years.
Posted by: Bucket Chick at September 9, 2011 9:49 PMBucket Chick - Use getting married as an opportunity to move to a sane state and start over. Don't do it to yourself - buy a house somewhere else. New Hampshire is more liberty-oriented and right next door, or you can certainly find a job in Virginia. You have no idea how much better life is when you cut yourself free from all the leeches in RI.
Wouldn't you like to open the newspaper one day and not see a politician going to jail, some fireman or cop scamming the pension system, and a story about how the state is drowning in debt all on the front page? That stuff drains you, and not just in the monetary sense. I open the paper here and the stories are actually pleasant. Why choose to live in the most corrupt, bankrupt state in the union? You have 49 others to choose from.
Posted by: Dan at September 9, 2011 9:57 PMDan,
Posted by: Bucket Chick at September 9, 2011 10:14 PMI think about moving all the time, but mostly just over the border to MA. My whole family is here, and we'd like to try for a baby (too personal, probably, sorry). But, I was SO fortunate to grow up with a huge extended family around me, I would hate to deny my potential child that kind of big, loving environment that I am absolutely distressed at the idea of moving far away. That's the thing, these issues, as personal as they are for the people whose pensions are in "jeopardy," are just as personal to the rest of us! I just don't get a sense of urgency or resolution on the part of anyone involved to take "the others" into serious consideration. We all should count. This "fight" of public workers versus non-public workers is a false construct. We all should be working towards a fair resolution that considers where we're all coming from. I have teachers, police, firefighters and miscellaneous public workers in my own family and among my dearest friends. I neither hate nor vilify them. I want them to be able to live and thrive - but not at the expense of me and my non-public worker family and friends. I just want reasonableness and fairness for all of us.
If you don't want to move far away, New Hampshire or even Massachusetts might be a better option than moving South. You could still live 30-60 minutes away from all of your family, but with lower taxes, probably a better job, and less aggravation (MA isn't much better in that regard though).
I understand that it's hard to leave family, but somebody has to break the vicious cycle or the corruption and tax shakedowns will continue. I'm sure you don't want your child to grow up in a state with garbage public education, high taxes, and no jobs, but that's all that RI has to offer the young people left in the state. It broke my heart to leave my home state and my family too, but I couldn't stay and be a victim any longer, and it's immoral to subsidize corruption with your tax dollars through inaction. I'm also going to try to start a family in the next few years and I didn't want my kids to grow up being governed by the mob like I was. I want them to learn that hard work and merit are rewarded, and they could never learn that in RI.
Posted by: Dan at September 9, 2011 10:27 PMI think that when considering the whole pension mess, it would be useful to distinguish those pensioners who are actually relying on their pensions to get by - I don't want to take food out of anyone's mouth for heaven's sake. But let's not forget, that there are plenty of people who are collecting multiple pensions or collecting a pension and also working. I would agree to a "sliding scale" of pain, so to speak. I understand that promises were made, but I don't think it should be forgotten that pensions were meant to care for those who were too old or infirm to work. That is not what is going on these days.
Posted by: Bucket Chick at September 9, 2011 11:08 PM