Now Who’s “Created This Problem?”
Did you catch the article this week by Tim White on pension averages and this other great nugget called “Option IV”?
Of course we all remember a few months back when the Cranston firefighters’ union President Paul Valletta accused Treasurer Gina Raimondo of “creating this problem.”
Valetta charged that there is no pension problem as stated by the General Treasurer but instead this is just playing politics. “She created this problem, she created this pension problem on April 13th of this year and now she’s riding in on her white horse with this pension legislation before you to solve this problem and why did she do that? We will find that out in three years,” said Valletta.
However, this article by Tim White has to make you wonder who at least is playing a large part in creating this problem.
First we have Providence Firefighters Union President Paul Doughty making some inaccurate claims (yes, I’m looking at you Politifact). White references Doughty’s claims of the average firefighters’ pension being about $25,000 per year.
But here is what Doughty isn’t saying: the average retired firefighter’s pension is $48,142 a year – nearly double the average amount Doughty highlights in radio, print and television interviews. That’s according to 2011 pension data the city provided to WPRI 12 in response to a public records request.
And back to that “Option IV” thing. We hear about how so many of the pension systems are drastically underfunded and many of us have questioned the politicians as to why these systems have been so underfunded. Some have also questioned why the unions didn’t hold the pols’ feet to the fire in keeping the systems properly funded. Well, we might have found one reason for that.
Here’s how “Option IV” works, based on an actual example from city records: When Firefighter “X” retired in 2012, he opted to take $153,000 out of his pension account in a one-time cash payout, which is the amount of money he contributed to the pension fund from his paycheck over the years. That reduced his annual pension from $34,000 to $24,000.
Records show 1,475 of 3,148 retirees – nearly half of all Providence pensioners – used “Option IV.” The ratio is even higher for public safety retirees, with 55 percent taking the lump sum cash payment upon retirement.
If “Option IV” wasn’t available and those retirees had been forced to leave the money in their pension accounts, the average city pension would be much larger than the amounts Doughty cites in interviews.
Imagine that. You pay into the pension system for your career and then upon retirement, you get to take it all out in one lump sum that you can then do anything you want with it. So at that point, many would think that the retiree is off the books. Nope. That person still receives a pension, however at that point, it is 100% of the taxpayer funded. Part of what helps these investment funds is having the capital to earn interest. If that capital isn’t there, less interest is earned and the fund further lags.
What’s worse is as White mentions, until the rules changed, retirees on disability could withdraw their own money and not see any reduction in their pension. Imagine what that did for the fund’s balance. Oh that’s right, we don’t have to imagine it, we’re seeing it up close and personal now.
It’s things like this that show the problems are multi-faceted and the blame doesn’t just go in one direction. And as for Option IV, that name is more than a little ironic as this perk has helped to put the state on life support through an IV.
When are you people going to realize & acknowledge that Paul Doughty & Co. are nothing more than Entitlement-minded blow-hards who’s only objective is to fleece the Taxpayers.
You had to love this clown when he was out whining about Brown University not paying more in taxes.
In one breadth, he is giving sanctimonious speaches about how they should “pay their fair share” and in the other breadth he is bitching that Mayor Angel Tavares is attempting to not “honor our contracts”.
He is happy to break the PILOT agreements (i.e. contracts) that Brown has with the City, but god-forbid you “break” the precious FFs contract.
People need to stop giving this clown a voice. He and his Entitlement-minded ilk are destroying the City.
The fact that he now shows up to work is a miracle; stop putting a microphone in front of him and let him “work”.
“When are you people going to realize & acknowledge that Paul Doughty & Co. are nothing more than Entitlement-minded blow-hards who’s only objective is to fleece the Taxpayers.”
I don’t think there’s anyone here who doesn’t realize it.
You are thinking of the blog where Tom Sgouros and college washout Sammy Howard are the “shining lights”
“…you get to take it all out in one lump sum… That person still receives a pension.”
I want to sigh up for THAT lottery!
“Would you like the lump-sum or the annuity?”
“I’ll take both!”
Mangeek, the application period for the next academy is almost over, Providence residents get 10 points, so hurry up!
Even the base pay rate compares favorably with the kind of job I do now (client technology). The pension as it is would cost me about 20% of my check to do on my own.
Unfortunately, I have a neck injury (my hands are permanently at 80% of what they should be now) from sitting for 12+ hours a day that would probably put me out of the running. Maybe I’d be better-off applying for a disability pension caused by that in-the-line-of-duty injury…
…Oh wait. 😉
Thanks Leo, always good to have new commenters here. But who are you referring to when you ask that Doughty not be given any attention? Unfortunately, he’s a public figure and a person with a certain degree of power. I’m not going to say that I have any influence over anything at all, but if I don’t call out some of his statements and actions, then he continues to do what he wants, quietly and behind the scenes. It’s been said over and over again that sunlight is the best disinfectant. I can understand your desire for him to not even have a platform on which to speak, but that’s not the Rhode Island we live in. The unions do have a good amount of sway in this state and when they are involved in things like misstatements and this negotiated “option IV”, it’s a good thing when Tim White writes about it and blogs comment on it.
Gotta chime in on this one: These debates are piddly-nothing BS compared with the reality that the pensions are not going to make the returns on their investments, as projected. COLA freezes; adjusted effort; and so on are mere nicks in the asteroid heading our way.
The implicit argument that they’re getting us to make is that everything will be just fine if we adjust for these obvious abuses. Not true.
That’s true, Justin, but if the pension system didn’t have all these corrupt special options and benefits (5-6% COLA, 20-year-retirement, disability, lump sum, multiple pensions, second career, etc.), then such a high rate of return would not be required to keep the system solvent in the first place. All of these related issues should be addressed but kept in perspective.
Mangeek, the application period for the next academy is almost over, Providence residents get 10 points, so hurry up!
Posted by michael at June 3, 2012 12:09 PM
Family members of corrupt Irish hack families that have been in “public service” for a century or more are given 500 points.
Day, Glancy, Sullivan, Partington, Shaw, Kenney, Riley..Come On Down…
@Tommy Cranston:
“”” Family members of corrupt Irish hack families that have been in “public service” for a century or more are given 500 points.
Day, Glancy, Sullivan, Partington, Shaw, Kenney, Riley..Come On Down…”””
You, sir, can kiss my Irish @$$!! Stating that I’m (and my family) is corrupt!
FYI for everyone else, did no one read that Firefighter X took a 33% reduction in his pension?
It’s a crap shoot as to whether or not you will make more by taking your money out of the system or leave it in – depending on how long you live and continue collecting a pension. A person who retires after just 20 years and lives to his eighties and keeps his money in the system will collect far more than he would if he took his money out.
Also, the “average” of $48,142 p/year takes all of the 5% & 6% COLA pensions (mostly 6 figures) into account. That certainly has nothing to do with the “average” Prov FF. Mr. Doughty’s figure is much closer to the truth than the $48K figure.
And, the fund is underfunded because the City (beginning under Cianci) has borrowed from it and continually underfunded it over the last 30 years!!
You can make all the stats
…say whatever you’d like them to say, it’s all in how you use the numbers!
Tom Kenney’s words say all you need to know: “A person who retires after JUST 20 years and lives to his eighties and keeps his money in the system will collect FAR more than he would if he took his money out.”
Who, besides entitlement-minded public employee union hacks can even think about Retiring after JUST 20 years?! But for Tom and his ilk, this crap just rolls off their tounge.
And by the way, what did Tom and his buddy Absentee Paul Doughty do when the City wasn’t funding the Pension Plan properly? NOTHING, because if the City had funded it properly, the City would not have been able to afford to give Tom and the girls the big fat raises and other goodies they have received year-after-year-after-year.
So they shut their Entitlement-minded Union-hack mouths to make sure the gravy kept rolling in. They are like the orphans who kill their parents and then plead for mercy because they’re orphans.
Leo is a jackass. Does he know that I’ve been working on the trucks in the Prov Fire Dept for over 31 years? That I am 57? That Local799 took the City to court to force the City to fund our pension? That RI Superior Court (with Justic Flanders!!) stated that the City did not have to fund the system as long as they were paying the pensions?
No. No. No. No. Of course not. And guess what? He doesn’t care. His opinions won’t change simply because the facts don’t line up with his thinking!!
And…BTW…girls?? I won’t even dignify that……
“what did Tom and his buddy Absentee Paul Doughty do when the City wasn’t funding the Pension Plan properly? NOTHING”
Actually, they did. They sued the city. But the judge ruled the city is not required to make the payments into the system, they were merely required to make the payments *out* of the system and to the retirees.
However, in light of that judge’s ruling, I question why then the union didn’t negotiate it into the contract that the pension fund needed to always be at a certain funding level. Instead, they trusted elected politicians and even future, not-yet-elected politicians to not act like a kid left alone in a candy store.
Patrick,
Actually we attempted a few times to do this but the City never wanted to give up control. In fact they passed a city referendum to add 2 more mayoral appointments to the retirement board to make sure they had control from within also.
C’mon Tom, I’ll give you the same answer I get from the other side when I criticize them for not getting something, it’s collective bargaining. In other words, forcing the city to make the payments, via the contract was not as important as some other things to the union side. The city saw that as something of value and would have required something else in return.
Everything is negotiable.
Patrick:
What could we offer the City that could equal $50 million p/year. Being able to defer (or ignore) those annual payments are/were huge annual savings for the City. I can’t think of anything we could have offered them over the years that would have tempted them to negotiate on that issue.
Tom-tom Kenney says: “Being able to defer (or ignore) those annual payments are/were huge annual SAVINGS for the City.”
[Personal insults removed by moderator. Please keep the discussion to the topic and not to insult other commenters]
… would define Kicking-the-Can-down-the-Road as “Savings”.
Is there any wonder why the state is effectively bankrupt?
Let’s try this again – Tom Kenney writes: “Being able to defer (or ignore) those annual payments are/were HUGE annual SAVINGS for the City.” First, Tom and his ilk define Kicking-the-Can-Down-the-Road as “Savings”. Is there any wonder why the State and many of its Cities are effectively bankrupt? Second, as Tom himself says, these are HUGE payment requirements. Huge, as in UNSUSTAINABLE. But no problem, lets ignore them while we demand more salary increases, more free healthcare, more days off, ever more perks. Third, Tom tells us “I’ve been working on the trucks in the Prov Fire Dept for over 31 years?” Big deal, are we supposed to be impressed? He’s only 57 years old, for Christ’s sake. Fourth, why doesn’t Tom tell us how many of his sister FFs have “retired” after just 20 years, or 25 years …or worse, less than 20 years? Too many to count, Tom? Tom is always very vocal when defending the Entitlement-minded demands of the FFs. He even writes books with all his time off. But, where was Tom’s very vocal voice when: – the City was not funding the Pension, because it was unaffordable due in part to all the other demands that Tom & Co. were making. Tom was Silent. – his pal Paul Doughty was absent from work for 3+ years collecting full pay & benefits from the Taxpayers while “working” on union issues and worse, coming in to collect Overtime. Tom was Silent. – when his pal Paul Doughty was demanding that the City break its contract (i.e. PILOT agreement) with Brown University, while at the same time screaming that the City couldn’t break its contract with the FFs and PD? Tom was Silent. – when the City was doling out unsustainable and inequitable 6% COLAs. Tom was Silent.… Read more »
Leo (or George):
You make it up as you go along….insulting me and my peers while telling everyone who’ll listen what we objected to and what we didn’t. You pretend to know what I was silent about and what I wasn’t.
You are not worth arguing with.
I will answer anyone’s criticisms or questions. Anyone, that is, who is not a total jackass who merely wants to spew insults.
Justin, Patrick, Andrew, Mark, Monique & Patrick….your blog is worth commenting on if it could be a real give and take (and even real disagreements) without the cement heads who ignore other’s opinions and will never take them into consideration while judging an issue. Unfortunately, with the exception of the six of you, there are only a handful of others who do that. Too many are like Leo….
I stopped posting on RIFuture because of the extremists on the Left. This blog is filled with extremists on the Right.
Boo-hoo, I’m taking my toys and going home to pout.
Tom – if you want an example of spewing insults, attend the next FF’s rally against, say Obama, coming to the City.
Or, how about you show up at the next FFs rally outside of Hemenways restaurant while they blow horns and sirens in an attempt to disrupt and intimidate Brown University.
Tom – we know, the truth hurts. You were silent on all these critical issues, but awfully loud when you were demanding more and more of the taxpayers limited resources.
So go ahead, take your toys, go home and pout. You’ll be silent again!
Is this a blog that welcomes discussion from opposing views or is it merely a place to preach to the choir, give each other pats on the back and insult everyone with opposing views?
Moderators?