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Hi All:

An interesting read over at the USA Today about the Government Retirement Funding. While non-government employees are hit with a 15% SS deduction for future benefits that the government than borrows as general income, the Government retirees with almost 80% less participants are receiving almost as much and there is nothing to back it up. That is right, nothing!!!

Federal retirement plans almost as costly as Social Security - Dennis Cauchon, USA TODAY

Retirement programs for former federal workers — civilian and military — are growing so fast they now face a multitrillion-dollar shortfall nearly as big as Social Security's, a USA TODAY analysis shows.

The federal government hasn't set aside money or created a revenue source similar to Social Security's payroll tax to help pay for the benefits, so the retirement costs must be paid every year through taxes and borrowing.

The government paid a record $268 billion in pension and health benefits last year to 10 million former civil servants, military personnel and their dependents, about $100 billion more than was paid a decade earlier after adjusting for inflation. And $7 billion more was deposited into tax-deferred accounts of current workers.

In addition, the federal government last year made more than a half-trillion dollars in future commitments, valued in 2010 dollars that will cost far more to pay in coming decades. Added last year:
$107 billion in retirement benefits accumulated by current workers.


$106 billion in new benefits granted to veterans.


More than $300 billion in the snowballing expense of previous retirement promises that have no source of funding.
In all, the government committed more money to the 10 million former public servants last year than the $690 billion it paid to 54 million Social Security beneficiaries.

The retirement programs now have a $5.7 trillion unfunded liability, compared with a $6.5 trillion shortfall for Social Security. An unfunded liability is the difference between a program's projected costs and its projected revenues, both valued in today's dollars…

Private employers are legally required to put money into pension funds to match retirement promises. Private pensions have $2.3 trillion in stocks, bonds, real estate and other assets. State and local governments have $3 trillion in retirement funds. The federal government has nothing set aside… http://www.usatoday.com/news/washington/story/2011-10-11/federal-retirement-pension-benefits/50592474/1?csp=YahooModule_Money


Wayne

This is one of those problems that needs to be addressed. The last thing we need is tens of thousands of additional employees going on the federal payrolls each year. I would like to see a ten percent cut across the board and another fifteen percent cut through attrition down to a mandated maximum number of paid federal employees per year, excluding military.

This needs to start at the top with cuts to the Congress and the White House staffs.

It doesn't appear that there is a way out of the mess we are in.

I predict that the dollar will be replaced with some other currency eventually. Maybe sooner than later.

The only way this will work is we grow the economy, we need business friendly policies at all levels of government. Start by getting rid of all the Democrats and beating the crap out of the Republicans until they do better. Its possible the Republicans can be reformed.

I recently read a novel by Larry Correia, "Monster Hunter International".. lots of fun, he is a gun nut right wing accountant and has a very interesting blog.. I signed up for the blog..here is the first sample I received:

http://wp.me/p7hZN-LY

"The President says we’re soft
Posted on September 30, 2011 by correia45

“This is a great great country that had gotten a little soft and we didn’t have that same competitive edge that we needed over the last couple of decades,” Mr. Obama said in response to a question about the country’s economic future. “We need to get back on track.” – Barack Obama, http://www.nationalreview.com/corner/278769/wait-malaise-french-soft-jonah-goldberg

Yep. That’s it, Mr. President. We’re soft. We’ve lost that competitve edge. We need to get back on track.

Let’s see, business is noncompetitive… Yet, during the last two years of my professional finance career, we have been through 6 different audits from 6 different government agencies. (total dollar value found to be owed to the government? Zero). As far as finance managers go, I’m not that weird.

Wow. I wonder what value I could’ve been adding to my company during that instead of creating multiple phone book sized reconcilliations that no government employee will actually ever read. However, if I’d failed to spend hundreds of hours producing these useless documents, we’d have gotten fined and put out of business.

WARNING: I am about to go on an angry tirade about why American business is not competitive. Spare me the useless offended emails about how not all government employees are bad. Dur. "

Read the rest of the post, its very interesting how it all turns up.

To be fair, typical FED salaries are far below that of the corporate world. The reason it's found acceptable is the benefits package makes up for the much lower salaries. I don't disagree that benefits need some employee contributions, but the lower base pays isn't something I've seen brought up yet.

To be fair, typical FED salaries are far below that of the corporate world. The reason it's found acceptable is the benefits package makes up for the much lower salaries. I don't disagree that benefits need some employee contributions, but the lower base pays isn't something I've seen brought up yet.

I'm not buying it.

What I can tell you about pay rates is that in the past five years two of my former supervisors got slight pay raises to do for the gov't more or less what they supervised me doing in the private sector. From talking to them, satisfaction issues from being stuck in a bureaucracy are the only drawbacks to their new jobs (pay, benefits, hours, job security and working conditions are better). Perhaps it depends on where in the corporate world you are.

My impression from sometimes being "supervised" by fed and state workers is that most of them would not be able hack the private sector after a few years of being spoiled by working for the government.

Not to worry. There are fewer and fewer Americans with pension plans. I see that the military is being mentioned as a place to cut back on pensions, civil servants are universally hated (except when you need them) and are a low hanging fruit and I’m sure they will soon feel the “no pension axe”. What the heck, if you don’t have a pension the question isn’t “why don’t I”, it’s "they shouldn’t have one either".

Yep, divide and conquer. Pensions? Bah Humbug. If you aren’t wealthy, work till your dead. After all it’s your fault…..you didn’t become rich.

That’s my angry rant. Now back to my normally scheduled afternoon of happiness.

OK, I’m not done. The Federal retirement system is a 3 part system.

They get 1% of their average high 3year’s base pay for every year worked. Start as a biologist fresh out of college, age 24, work till your 65 and you’ll get 41% of your pay. (that’s about $25,000 a year) Generous? Yes, but overly, hardly.

They have a 401K equivalent. The government matches up to 5% of the base pay of the employee.

The third is social security.

Federal employees have college degrees at twice the national average.