General Assembly Trying to Further Mess Up the Pension System
House Bill #7201 submitted by State Reps Savage, San Bento, Ajello, Blazejewski and DaSilva is an attempt to force the teachers at the Rhode Island Mayoral Academies (RIMA) into the state pension system. Currently, the staff at RIMA are in a defined contribution plan, or more specifically a 401k plan. They pay into the system, they maintain their own account and they know how much money they will have. To know specifically what this bill is about, all you have to do is read the summary at the end of the bill.
This act would require that teachers, administrators and employees of mayoral academies participate in state teachers’ retirement system. This act would take effect upon passage
Hey teachers at RIMA, are you all aware of this? I hope so and I hope you all react in the same way as you would if these State Representatives were trying to take away your retirement funds, because that’s potentially what could happen.
I did wonder what the people working with they thought at RIMA, so I asked Michael Magee, the CEO of the Rhode Island Mayoral Academies:
“Mayoral Academy teachers are highly satisfied with their 100% solvent and very generous matching 5% 401K retirement plan. I can’t imagine why anyone would want to force them into the state pension system. We view the Blackstone Valley Mayoral Academies compensation system as a valuable innovation worth studying, not as something to disrupt at the expense of hardworking public school teachers.”
Mr. Magee makes an excellent point here. This General Assembly is doing exactly the opposite of what they should be doing. Instead of forcing these teachers out of a plan they’re happy with, they should be taking a look at how RIMA is doing things right and see if it is feasible for the rest of the teachers in the state.
Anyone have any guesses on why the Assembly would be looking to do this? How about this one. RIMA teachers seem to be on the younger end of their career, so they have another 20-30 years of work before they’ll ever collect a pension. That is 20-30 years of payments into the system. Also that is a whole lot of new money to dump into the system and use to pay the current retirees with. But then what happens in 20-30 years? Who knows. The only thing we do know is that Reps Savage, San Bento, Ajello, Blazejewski and DaSilva will be long gone from the General Assembly and will simply be “mistakes of our past.”
And what exactly do you call that when you have new people pay into a system and the money gets paid out to people who paid earlier? Oh yeah, that’s called a Ponz…ohhh, you almost got me there. I almost said it and we know that’s a no no, right Politifarce?
Re: And what exactly do you call that when you have new people pay into a system and the money gets paid out to people who paid earlier? Oh yeah, that’s called a Ponz…ohhh, you almost got me there. I almost said it and we know that’s a no no, right Politifarce?
Why doesn’t this apply to the recent reform and all of the people who have been contributing their entire careers? Is is just that they are public sector? It is getting more clear everyday. It was just an attack on public sector workers, and and more money for Wall St.
“I did wonder what the people working with they thought at RIMA, so I asked Michael Magee, the CEO of the Rhode Island Mayoral Academies”
While 7201 may not be a good fit – I have to question you referring to the CEO to explain that teachers at the Mayoral Academies are happy with their plans. Its like asking my boss to comment on my satisfaction with my pension plan; sure he may think its a great plan and I might be working there but it does not mean I am happy with my current retirement plan offered.
I suppose this is part of the growing pains for RIMA. They seem to struggle to find classroom space; struggle to navigate through communities who have become somewhat divided in the wake of this “new model for eduction”; and now find themselves disrupting the retirement system for public school teachers.
I agree a private 401k is the better way to go moving forward, but we most also recognize the impact these changes have on the state and local communities.
There is an impact on the system for every student that decides to leave a traditional public schools for a charter. The same is true for teachers, as the ratio changes.
This proposed bill spotlights one of the consequences caused by the increase in charter schools. As taxpayers, as a state, we need to figure out how this is all going to work…
We allow all these new charter schools without any appear regard for how they fit into the overall economics of the state and the communities they serve.
Jan,
Public vs. private has nothing to do with this. People in the DB system have been promised bigger benefits than their contributions can generate. There’s wasn’t enough money to cover the benefits that Bernie Madoff’s “investors” had been promised either, but that didn’t mean that the government should have 1) forced more people to invest with him and/or 2) taxed people not in his system to pay for his promises.
And if you want to be in a defined benefit system that doesn’t rely on investment growth, just like a 401(k) does, you can’t expect to get back a total amount that’s any more than you put in.
Michael,
Saying that the creation of Mayoral academies “disrupts” the RI teachers’ pension system, because a portion of the salary of Mayoral academy teachers won’t be available for paying off current retirees, is about as direct an admission as is possible that the current DB system is being run as a Ponzi scheme.
direct an admission as is possible that the current DB system is being run as a Ponzi scheme.
Posted by Andrew at February 4, 2012 1:04 PM
Admission? Has anybody ever said anything different?
You mean someone paying 4 grand a year for 20 years then retiring at 40 and collecting for 40 years plus COLA’s with a $20K + annual health package to boot isn’t sustaining?
Well goooooolleee I guess I just weren’t smart enough to figure that one out…
LOL
“is about as direct an admission as is possible that the current DB system is being run as a Ponzi scheme”
No no no. Remember, though the end result (financial collapse) would be exactly the same if no adjustment is made, there is no INTENT to run the DB pension system as a Ponzi scheme. Accordingly, it is not technically a Ponzi scheme.
(I forgot what fiscal genius rendered this pronouncement about social security. Was it PolitiFarce …?)
“I forgot what fiscal genius rendered this pronouncement about social security.”
Duh! You linked to it in your last sentence, Patrick.
This genius is going to bed.