OT: Tyler Summitt will continue to collect Pat's pension ... until he dies

[MilfordHusky]

Retirement benefits are part of a compensation package. Some packages do not include a pension. When a person considers taking a job or staying in a job, the totality of that package is considered. In many cases (as BigBird notes), there are trade-offs, such as better-than-average retirement benefits and vacation benefits in exchange for lower-than-average pay. Though some systems make errors, presumably the complete package offered by employers is rationally thought to be what is needed to attract the employees they want. I'm surprised that the Tennessee system (or others) allow survivor's benefits to the next generations, but actuarially it can be calculated.

Regarding social security, a number of fixes have been proposed. One obvious one is to eliminate the salary limit for taxation. Gradually raising the retirement age also makes total sense, given today's longevity.

Two things related to retirement (broadly speaking) annoy the crap out of me. The first is the golden/platinum parachutes that executives get for messing up. This is a case of perverse incentives--a bonus for failing?? The second is immoral and should be illegal: large corporations bailing on their pension liabilities by declaring bankruptcy, for example. Look at all the people who worked for Enron, Bethlehem Steel, United Airlines, etc. who got screwed over. Thousands of lives were harmed by incompetent management and callous decisions.

 

[pinotbear]

Takes a load off my mind. Been worried about the Boy King.

Born in Arizona, moved to Babylonia,

 

[MilfordHusky]

Born in Arizona, moved to Babylonia,

One of the all-time classic performances from the brilliant Steve Martin.

 

[Husky1964]

Read in the WSJ that some civil war widows, married early in life to aging vets are still collecting from USA>!!!!!!!

 

[HopJim]

http://www.tennessean.com/story/spo...ves-personal-property-tyler-summitt/89317990/

I'm not that famiI love Hillar with standard operating procedures for publicly funded state retirement systems, but can someone tell me if this is normal for a state's taxpayers to be on the hook for supporting a retiree's child for so many decades beyond the retiree's death?

The relevant excerpt from the article:

Tyler Summitt also was designated by his mother to be a non-spouse beneficiary of her state pension. When she retired, Pat Summitt opted to collect a monthly benefit of $14,460, or $173,520 annually in 2012. That benefit, with an annual cost-of-living adjustment, is now collected by Tyler Summitt for the rest of his life. Pat Summitt could have opted instead to collect $21,141 per month, or $253,632 annually, without choosing a beneficiary, and the payments would have ended upon her death.​

This seems perfectly normal. Relative to pay out, keep in mind that most government employees are underpaid relative to commercial world throughout their career. For every Pat Summit, there are 1000 Clerks making $28,000 per year managing key programs or systems within a city, county, or state.

 

[kibblesnbits]

There's still something wrong with that plan. If they are going to permit inter-generational survivorship the downward adjustment for selecting that option should have been much more. For a normal 62 year old at retirement they probably have an 15-20 year or so expected lifespan. For a normal 23 year old (I think that was Tyler's age when she retired), the expected lifespan would be 50-60 years or more. Tripling the expected payout period should have required more than a less than 1/3 reduction in annual benefits. That's especially true since her pension includes a cost-of-living adjustment, which largely offsets the time value of money calculation.

 

[CTyankee]

Pension benefits like this are the reason that California is in financial difficulty. They are at the point were they pay more in retirement benefits than in actual salaries.

But since they gave her the choice Tenn is on the hook for those payments. Then of course those morons that offered such options never reap the negative consequences of their actions. That will be felt by the rest of the people in the state via program cuts to those that really need it. Another example of the growing economic class devide reinforced by government.

I thought the morons in NC were bad allowing the Governor to take $500,000 from their "Rainy Day" fund to defend thir Bathroom Bill which the Federal Government has taken to court. Tyler may never have to work another day in is life, that is unless he's on the hook for child care...

 

[willtalk]

This seems perfectly normal. Relative to pay out, keep in mind that most government employees are underpaid relative to commercial world throughout their career. For every Pat Summit, there are 1000 Clerks making $28,000 per year managing key programs or systems within a city, county, or state.

Not in California. People that work for the State or Local governments are usually above market value. Many of the Towns ( including the one I live in ) had to file bankruptcy and let off employee's and cut services because the pension plans absorbed all the money. Employee's would also build up over time to inflate their listed income for retirement. A few actually got more than they made while they were working.

 

[MilfordHusky]

Not in California. People that work for the State or Local governments are usually above market value. Many of the Towns ( including the one I live in ) had to file bankruptcy and let off employee's and cut services because the pension plans absorbed all the money. Employee's would also build up over time to inflate their listed income for retirement. A few actually got more than they made while they were working.

A few years ago, there was a provocative story in the media about the high pay of Newport Beach lifeguards. The initial reaction was very negative, as people envisioned teenagers making $200K per year for sitting up on the lifeguard chairs. The reality was (1) only a few people were making anywhere near that, (2) they managed several others, (3) they had advanced lifesaving skills, and (4) they worked well beyond a 40-hour workweek. One piece of irony is that a family earning "only" $200K per year cannot afford the average house in Newport Beach, which runs about $3M. So, apparently it's unfair for the lifeguard to be making $100K+ for protecting those making $500K. Newport Beach is like New York City--no income, pay, or price numbers make sense.

Newport Beach Lifeguards Earn Over $100K Despite California's Deficit

 

[DaddyChoc]

I thought you chose the "Option" when you sign up for retirement (beginning of employment)... but nope you make the option when you "signing off" from working.

I just contacted my Retirement Fund (previous employer) and they informed me when I turn 55 and want to collect I decide at that time which option I want. Cool... I'm going the Pat Summitt route if I make it that far.

Thanks for all the info from all, especially you JS (haven't heard from you in a while, guess I've been behaving )

 

[MilliniumPrince]

If the idiot lives another 50 years the payout will not come close to the value his mom added to the university and the state. Story sounds crazy, but how much was Pat Summitt worth to Tennessee over the length of her career and beyond?

 

[MilfordHusky]

If the idiot lives another 50 years the payout will not come close to the value his mom added to the university and the state. Story sounds crazy, but how much was Pat Summitt worth to Tennessee over the length of her career and beyond?

I think the answer is: Priceless.

 

[Beemer]

Read in the WSJ that some civil war widows, married early in life to aging vets are still collecting from USA>!!!!!!!

My grandmother collected a pension for widows of World War I veterans for 28 years after my grandfather died. It was $5 a month.

 

[JS]

Read in the WSJ that some civil war widows, married early in life to aging vets are still collecting from USA>!!!!!!!

Here's the article.

Not a widow but the last surviving pensioner child of a Civil War vet. If the vet had no living spouse, he could name a child as beneficiary.

The last widow of a Civil War vet died in 2008.

 

[JS]

Thanks for all the info from all, especially you JS (haven't heard from you in a while, guess I've been behaving )

Don't push your luck.

 

[Fairfield Fan]

That choice is perfectly common in private sector as well as government pension plans. It's not a special deal and is offered to all pension plan participants.

The lifetime benefit is reduced so that the overall combination of lifetime and survivor benefits costs the state the same, based on actuarial tables, as would the larger single-life annuity with no survivor benefit.

Assuming this is under the Tennessee Consolidated Retirement System, it looks like she selected Joint and Survivor Plan Option 1 - i.e. a 100% joint and survivor annuity.

If you think pensions to public sector employees are too high, that's an arguable position. But it's not because of the options offered under the plan, which theoretically are all of the same value.

Note that the health of the individual pensioner is not taken into account. The monthly lifetime benefits are based strictly on age. Therefore, knowing what Ms. Summitt knew when she retired in 2012, the 100% survivor option was the best she could do for her son.

Yes, it's not unusual. Under Social Security, if I'm not mistaken, a spouse collects a percentage of the deceased spouse's benefits as long as that surviving spouse lives. What looks odd here is the size of the benefit. But I would be willing to bet that the number of Tennessee employees eligible for anything close to this retirement benefit can be counted on the fingers of two hands. In Connecticut, the average retirement benefit for state workers is about $33,000 a year. For Connecticut public school teachers, if memory serves, it's about $46,000 a year, but Connecticut teachers are not eligible to receive Social Security.

 

[Fairfield Fan]

Abuse of taxpayers --has no legal status, no violation assumed or inferred. Your point that Tyler shall inherit his mama's millions et al to me --to provide a pension that should have ended with Mama since there was no PaPa in it --for his apparently long life time--is taxpayer abuse. But since it was given, it shall be taken.

Pensions do not consider: Divorces, Mistresses, and a long list of possible legal actions no matter who or how they are diminished.

Actually, municipal pensions do, most assuredly take into account all of those factors. If one gets divorced and remarried, a new beneficiary is registered. Sometimes there is a dispute involving the previous spouse who claims a percentage of the survivor's benefits from the pension. Sometimes children of the first marriage get involved. So survivors of the retiree are taken into account. Quite common.

 

[Paesano]

Sure. All legal and, from some perspectives, all standard. But the reality is that social security and pension funds are going broke all over the place. Lawyers become politicians and then they use the treasury to buy votes. A well run and well structured pension would not go broke. But that plan would not get the support of the unions or the votes of their members. If you point out the obvious, you are labeled anti-worker. That's how it goes these days. Either you support the programs that politicians use to buy votes or you get demonized by their minions.

 

[BroadwayVa]

Actually, municipal pensions do, most assuredly take into account all of those factors. If one gets divorced and remarried, a new beneficiary is registered. Sometimes there is a dispute involving the previous spouse who claims a percentage of the survivor's benefits from the pension. Sometimes children of the first marriage get involved. So survivors of the retiree are taken into account. Quite common.

The Fed do something with Divorce splits depending on years of marriage, and under aged kids are cared for. The Employee has few options with multiple spouses--it is dictated . All I know about Divorced splits was in the retirement seminar--and I only listened to that which effected me.

 

[Fairfield Fan]

Not in California. People that work for the State or Local governments are usually above market value. Many of the Towns ( including the one I live in ) had to file bankruptcy and let off employee's and cut services because the pension plans absorbed all the money. Employee's would also build up over time to inflate their listed income for retirement. A few actually got more than they made while they were working.

Not in Connecticut. According to a Boston College study of the state's public school and state employees pension funds, the "normal cost," i.e., the amount invested each year to provide for future benefits of active employees, is lower as a percentage of payroll than the average for those employees nationwide. The problem in the Nutmeg State is that 1) for many years the state failed to actually put aside the required amounts each year, and 2) the problem that every pension fund has had- the worst capital market performance since the Great Depression, which has meant that investments have not come close to what they should have achieved in order to keep up with the future value of the pension benefits. In other words, in this state, employees are not to blame, and benefits are not high.

Now Coach Geno and his long-time assistant will probably do very well for themselves in their state pensions, just like Pat Sumitt, when they retire. But they will be huge outliers.

 

[Fairfield Fan]

The Fed do something with Divorce splits depending on years of marriage, and under aged kids are cared for. The Employee has few options with multiple spouses--it is dictated . All I know about Divorced splits was in the retirement seminar--and I only listened to that which effected me.

I've seen the disputes over such "divorce splits" on a number of occasions in this part of the state. Don't pretend to understand it all, though.

 

[BroadwayVa]

Sure. All legal and, from some perspectives, all standard. But the reality is that social security and pension funds are going broke all over the place. Lawyers become politicians and then they use the treasury to buy votes. A well run and well structured pension would not go broke. But that plan would not get the support of the unions or the votes of their members. If you point out the obvious, you are labeled anti-worker. That's how it goes these days. Either you support the programs that politicians use to buy votes or you get demonized by their minions.

The SS is a TRUST--LBJohnson, in an attempt to mask spending and balance the Fed budget took from the TRUST to fill the void. without any means to pay back or to even cover the interest. SS was a bad system from the start--starting in the hole by paying people who did not pay into the system (initially). But we are stuck with it.

My opinion (only)--Government (town, city, state, Fed) retirement systems are Ponzi Schemes --with those limitation.

 

[stamfordhusky]

Sure. All legal and, from some perspectives, all standard. But the reality is that social security and pension funds are going broke all over the place. Lawyers become politicians and then they use the treasury to buy votes. A well run and well structured pension would not go broke. But that plan would not get the support of the unions or the votes of their members. If you point out the obvious, you are labeled anti-worker. That's how it goes these days. Either you support the programs that politicians use to buy votes or you get demonized by their minions.

Exactly. Many of the pension funds would technically be bankrupt if they made reasonable assumptions as to future rates of return.

 

[stamfordhusky]

The SS is a TRUST--LBJohnson, in an attempt to mask spending and balance the Fed budget took from the TRUST to fill the void. without any means to pay back or to even cover the interest. SS was a bad system from the start--starting in the hole by paying people who did not pay into the system (initially). But we are stuck with it.

My opinion (only)--Government (town, city, state, Fed) retirement systems are Ponzi Schemes --with those limitation.

Definitely true for the Fed, which is nothing but a Ponzi scheme. As for cities and states, it depends on which one. Connecticut has one of the most bankrupt state pension plans - being only about 60% funded. The only worse ones are Illinois, New Jersey, and Kentucky. The total shortfall for the 50 states is approximately $1,000,000,000,000 , i.e. $1 Trillion.

State pension fund gap to top $1 trillion