By Anna Pulley
By Erin Sherbert
By Chris Roberts
By Erin Sherbert
By Rachel Swan
By Joe Eskenazi
By Erin Sherbert
By Erin Sherbert
Last week, the president and vice president of the local SEIU penned an opinion column in the San Francisco Bay Guardian espousing a marvelously novel take on the city's exploding pension crisis. The problem, per the column, isn't that the city is projected to spend upward of $400 million this year on pensions — a figure that, in the near future, is expected to double. The real trouble, according to the SEIU, is that we haven't been taxing corporations and the rich to the point where funneling the better part of $1 billion into yearly pension costs in San Francisco is easily offset.
Essentially, the solution presented by the union for fixing a leaky bucket is to pour water in faster.
That comes off as rather self-serving — and the SEIU stance on pension costs takes on even more of a "pay no attention to that man behind the curtain" tone in light of data recently unearthed by SF Weekly.
A document that has raised eyebrows at City Hall reveals the vast increases between this year's pension costs and those projected for fiscal 2011-12 — and lists them per union. According to the Mayor's Budget Office, the pension payments for SEIU workers alone will jump from $111.3 million this year to $155.5 million next year — a staggering 40 percent surge.
That's by far the largest spike in costs for any union — but it's hardly an isolated financial nightmare. Pension payments to firefighters will jump $10.7 million; professional and technical engineers will get an additional $15.8 million; and police will require an additional $16 million. Greg Wagner, the mayor's budget director, says there's "no specific utility" to breaking down pension costs by union. But it sure is interesting.
All told, the city is bracing for $425.6 million in pension payments in fiscal 2011-12, when you factor in $25.5 million contributed by the city for workers who do not pay toward their pension plans. Even the most conservative projections predict the city's payments will soon balloon past half a billion dollars and keep rising.
Public Defender Jeff Adachi, the union's bête noire, laughed at the notion that such prodigious cost increases could be ameleorated by merely bleeding corporations and rich folks. "The reality is, these pension costs are going through the roof," he says.
Perhaps the rich and corporations could be taxed, however, to defer pension costs going through the roof — by raising the city's roofs.
Read the source document online at http://bit.ly/SF-Pensions.
Let's see what these Plans REALLY cost (as a level % of pay throughout one's career), and WHO really pays for them ...
So let’s cut to the chase …....
Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).
More specifically, for the noted formulas, the level annual %s of cash pay are as follows:2% per year of service w/o COLA – 29%2% per year of service with COLA – 39%3% per year of service w/o COLA – 44%3% per year of service with COLA – 58%
Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.
This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.
TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .
Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.
Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.
It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.