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

[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

 

[CajunHusky]

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

It is NOT a Ponzi scheme.....
The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (collectively, the Social Security Trust Fund or Trust Funds) are trust funds that provide for payment of Social Security (Old-Age, Survivors, and Disability Insurance; OASDI) benefits administered by the United States Social Security Administration.[1][2][3]

The Social Security Administration collects payroll taxes and uses the money collected to pay Old-Age, Survivors, and Disability Insurance benefits by way of trust funds. When the program runs a surplus, the excess funds increase the value of the Trust Fund. At the end of 2014, the Trust Fund contained (or alternatively, was owed) $2.79 trillion, up $25 billion from 2013.[4] The Trust Fund is required by law to be invested in non-marketable securities issued and guaranteed by the "full faith and credit" of the federal government. These securities earn a market rate of interest.[5]
a
Excess funds are used by the government for non-Social Security purposes, creating the obligations to the Social Security Administration and thus program recipients. However, Congress could cut these obligations by altering the law. Trust Fund obligations are considered "intra-governmental" debt, a component of the "public" or "national" debt. As of June 2015, the intragovernmental debt was $5.1 trillion of the $18.2 trillion national debt.[6]

The Republicans during the Bush Administration suggested a revision championed by Paul Ryan that would have voided the full Social Security Trust - that is all those non-marketable securities held by the SS Trust Fund that the Federal Government has no intention honoring. The Republicans have been trying to destroy Social Security (and Amtrak and the Post Office and the National Endowment ad nauseam) for decades. Their first step was a law that required all SS Trust Funds placed in non-marketable securities, and then the creation of huge debt created by their no taxation policy.

 

[stamfordhusky]

It is NOT a Ponzi scheme.....
The Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (collectively, the Social Security Trust Fund or Trust Funds) are trust funds that provide for payment of Social Security (Old-Age, Survivors, and Disability Insurance; OASDI) benefits administered by the United States Social Security Administration.[1][2][3]

In a way it is a classic Ponzi scheme. No money was collected to fund the payments to those who are covered. The money I contributed when I worked went to pay benefits for people who had retired decades before. I just started collecting - and I have to hope that young workers will pay for my benefits. Thus the whole system relies on "newcomers" to the system to fund the payments that are due. It differs from a classic Ponzi scheme in that the federal government is involved - but there is a danger at some point in the future that the system will collapse under its own weight. Current federal deficit using GAAP accounting, where all unfunded obligations are included, has been estimated at over $200 Trillion. The published national debt does not include federal pension obligations, accrued obligations for social security, or accrued obligations for medicare. All of those will theoretically be funded on a pay-as-you-go basis, somewhat similar to the way Madoff funded his obligations. The difference, of course, is that the federal government can just continually raise taxes or confiscate assets to fund the bankrupt programs - unless the system collapses under its own weight.

 

[JS]

The Republicans have been trying to destroy Social Security (and Amtrak and the Post Office and the National Endowment ad nauseam) for decades.

OK, the thread has been verging on politics for a while and is now crossing the line.

Any more such comments will require the thread to be closed.

Am reluctant to do that, as it's become kind of an interesting off-season OT discussion if it can stay nonpartisan.

 

[CajunHusky]

In a way it is a classic Ponzi scheme. No money was collected to fund the payments to those who are covered. The money I contributed when I worked went to pay benefits for people who had retired decades before. I just started collecting - and I have to hope that young workers will pay for my benefits. Thus the whole system relies on "newcomers" to the system to fund the payments that are due. It differs from a classic Ponzi scheme in that the federal government is involved - but there is a danger at some point in the future that the system will collapse under its own weight. Current federal deficit using GAAP accounting, where all unfunded obligations are included, has been estimated at over $200 Trillion. The published national debt does not include federal pension obligations, accrued obligations for social security, or accrued obligations for medicare. All of those will theoretically be funded on a pay-as-you-go basis, somewhat similar to the way Madoff funded his obligations. The difference, of course, is that the federal government can just continually raise taxes or confiscate assets to fund the bankrupt programs - unless the system collapses under its own weight.

It is insurance: A promise of compensation for specific potentialfuture losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual, company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policy creates a contractbetween the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policyholder a sum of money upon the occurrence of a specific event.

or more specifically, an annuity: a fixed amount of money that is paid to someone each year. : an insurance policy or an investment that pays someone a fixed amount of money each year.

It isn't a Pon·zi scheme: ˈpänzē ˌskēm/noun form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investor.

 

[RockyMTblue2]

Can I get college credits toward an actuarial degree if I read all this stuff?

 

[lne001]

Cajun, I hope you are already retired.

The reality is that the Trust Fund (as it is quaintly called), is massively underfunded versus future obligations. That is not a problem as long as incoming contributions exceed payments, as has been true its entire existence thus far.

Last projection I saw, however, said that this annual surplus ends in 2021 and outgoing payments will then exceed exceed income. Given demographic and economic changes the continuing projection is that full "guaranteed" monthly payments will thus cease in 2033, but be able to continue at 75% indefinitely. There are steps which can be taken to address this, but they will be painful (e.g. increased taxes, reduced benefits, means testing).

In summary, Social Security is probably closer to a Ponzi scheme than insurance. Sorry.

 

[Paesano]

One other step to address the problem is to create inflation. If payments into the system are increased through inflation but payments out, aren't, the system could be inflated out of trouble. Now, payments out will be occasionally be increased to account for inflation but if those increases are kept below actual inflation, you can keep the ship afloat a little longer. The problem is that our "great" economy refuses to inflate very much despite all the stimulous and the historic level and period of easy money.

 

[CajunHusky]

Charles Ponzi was a Boston swindler who conned investors out of millions in 1920 by promising returns of up to 100 percent in 90 days on investments in foreign postal coupons. After first-round investors harvested those profits, others flocked to Ponzi, unaware his "profits" consisted of money paid in by other investors.

In contrast, Social Security is more like a "pay-as-you-go" system transferring payroll tax payments by workers to retirees. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi's scheme lasted barely 200 days.

Mitchell Zuckoff, a Boston University journalism professor who has written a book on Ponzi, noted three critical dissimilarities between Social Security and a Ponzi scheme:

• "First, in the case of Social Security, no one is being misled," Zuckoff wrote in a January 2009 article in Fortune. "Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns."

• Second, he wrote, "A Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted." While Social Security faces a huge burden due to retiring Baby Boomers, it can be and has been tweaked, and "the government could change benefit formulas or take other steps, like increasing taxes, to keep the system from failing."

• Third, Zuckoff wrote, "Social Security is morally the polar opposite of a Ponzi scheme. ... At the height of the Great Depression, our society (see 'Social') resolved to create a safety net (see 'Security') in the form of a social insurance policy that would pay modest benefits to retirees, the disabled and the survivors of deceased workers. By design, that means a certain amount of wealth transfer, with richer workers subsidizing poorer ones. That might rankle, but it's not fraud."

 

[Atleast5char]

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

As of 6 months ago, there was only one beneficiary still alive, the daughter of one of the marriages you mention. She was receiving about $73 a month.

 

[vtcwbuff]

SS is less of a Ponzi scheme and more of a crap shoot. How much return you get on the money the government took from you depends on beating the life expectancy odds. I'm probably on the plus side, but my long term financial advisor died a couple of months ago at age 64, a couple of years from his planned retirement. Uncle Sam gets to keep all the money they took from him.

I do know that had I invested what SS took from me I would have a lot better return on my money.

 

[DaddyChoc]

The United States Social Security Administration

sign up to view your wages over the many years, interesting