My wife has a sister and a sister-in-law who are both in education. Sister in Pittsburgh and other in Dayton area.

 

The retirement plan for her sister in Pittsburgh is unreal. It's a high % of the last two or three years annual salary. My guess is she's in the $75k range now for her salary.

 

I don't see how city and state governments can survive paying these funding these plans.

This hole is simply amazing in its dept.

 

Some thoughts.

 

Defined contribution is a must in the long term. Defined benefit is a risk factor that can not be taken on by governments or private companies.

 

If it goes like a lot of big companies it will go like this:

- The older group stays on same plan.

- The middle group gets 'converted'.

- The younger group and new workers go straight to defined contribution (matching 401K).

 

Older group should be OK. Younger group will have time to adjust. The tweeners have to re-evaluate everything and double check any math.

 

The current market is not the market of the 1990s. Very volatile, not much strong growth world wide.

 

It is nice to have an account with your name on it. But when that account gets cut in half with a flash crash - it hurts and you have to know to ride it back. And that is not the common person's mentality.

 

I'm under 10 years of service but 37. Scary times but something has to be done.

This hole is simply amazing in its dept.

 

Some thoughts.

 

Defined contribution is a must in the long term. Defined benefit is a risk factor that can not be taken on by governments or private companies.

 

If it goes like a lot of big companies it will go like this:

- The older group stays on same plan.

- The middle group gets 'converted'.

- The younger group and new workers go straight to defined contribution (matching 401K).

 

Older group should be OK. Younger group will have time to adjust. The tweeners have to re-evaluate everything and double check any math.

 

The current market is not the market of the 1990s. Very volatile, not much strong growth world wide.

 

It is nice to have an account with your name on it. But when that account gets cut in half with a flash crash - it hurts and you have to know to ride it back. And that is not the common person's mentality.

And when that 401(k) gets cut substantially in a market meltdown, like what happened in '08, older teachers will stay on rather than retire. School districts don't like a lot of older teachers on staff. Teachers north of 55 more likely to use health insurance, and the district can hire two teachers fresh out of college for what they pay someone with 27 years of experience. The current defined-benefit system allows teachers to retire after X number of years with certainty of retirement income. Not so with a 401(k) system.

And when that 401(k) gets cut substantially in a market meltdown, like what happened in '08, older teachers will stay on rather than retire. School districts don't like a lot of older teachers on staff. Teachers north of 55 more likely to use health insurance, and the district can hire two teachers fresh out of college for what they pay someone with 27 years of experience. The current defined-benefit system allows teachers to retire after X number of years with certainty of retirement income. Not so with a 401(k) system.

 

Correct on all counts, IMHO.

 

And quite frankly, we're counting on the bolded.

I asked the question in another thread, but I'm wondering how people would suggest fixing this problem, because it's obviously a problem.

 

From what I know of Bevin's plan, he wants an audit conducted, which is fine but doesn't really fix anything. I also see that he's trying to set up something similar to a 401k plan for new teachers.

 

I know there are people who are opposed to his plan, and I get that. But I would think you'd also have to be upset with how the retirement system has been seriously abused and mismanaged for over decade.

 

Didn't the rest of the state employees recently get something similar to a 401k plan for new hires already?

Didn't the rest of the state employees recently get something similar to a 401k plan for new hires already?

 

Yes, changes on that front have been made.

If I'm not mistaken the teachers retirement system, while doing poorly, is better funded than the Kentucky Retirement System all other state employees fall under, right?

If I'm not mistaken the teachers retirement system, while doing poorly, is better funded than the Kentucky Retirement System all other state employees fall under, right?

 

Correct........and the Legislative Retirement Plan is even better funded........imagine that!!

We all make sacrifices. I made mine on the front end, foregoing a double to triple salary over what I make now, given the "promise" that sacrificing on the front I would be somewhat rewarded with a decent pension. I did this because my job allowed me to pursue my passions outside of work, where a much larger paying job would have also come with longer hours that wouldn't have allowed me to do that. But, I sucked it up, went through some tough financial times and am here where I am today.

 

Now there is the possibility that I may have to "sacrifice" again because the legislature has been a bunch of bumbling idiots and, quite frankly crooks when it comes to public employee retirement. Yep, I'm not very happy with the road I and many others in the same situation could be going down.

 

With all that said, I will keep my head and wait and see what goes on. Big changes are coming regardless, just in my everyday work life...big changes. I will hold my breath and see what happens.

 

Isn't that what teachers do? Forego higher potential salaries for the same reasons you did?

I agree and I think there will be a mass exodus out of the state. Those in NKY can go right across the river and increase their pay dramatically. It's unfortunate. Between the lower pay, the garbage heaped on them by administrations, parents and students, and a continuing reduction in benefits I don't see why anyone would want to teach.

 

I knew of a lot of teachers doing this 10-15 years ago and I couldn't blame them one bit. I admired the ones that said they cared too much to leave where they were teaching but couldn't fault the others one bit for leaving.

Teacher pay in KY is not great but one thing that is good is the retirement.

Looks like the politicians may take care of that.

Isn't that what teachers do? Forego higher potential salaries for the same reasons you did?

 

As did I. Salary at the local CMHC wasn't much, but the health insurance and retirement were superb.

In a nutshell...it's underfunded by billions of dollars because of past state legislatures raiding the retirement fund for other projects and not only never replacing that money, but for most years the past 20 years not fully funding it to begin with. The retirement fund has been used by the government for many years as their own personal "play" fund.

 

Good to know the state of KY is run just like the good ole USA Federal Govt...

Isn't that what teachers do? Forego higher potential salaries for the same reasons you did?

 

No, I don't think so at all. Most teachers went to school to specifically be a teacher, and that's what they do, and mostly in public schools because that's where (most) go to teach cause that's the job. In my line of work, there are jobs in the Federal government, state governments, and the private sector in both general industry and construction, and to a lesser extent some other fields. The public/private argument for teachers is exactly the opposite...public school teachers make much more on average than their private counterparts. Now, I guess a private school teacher could say they gave up pay in the public schools to stay at a private school for the benefit of family, safety, school policy, etc., but it's exactly the opposite of what I stated above and there are far less private school teachers than there are public. But in general, the answer to the question you posed is no, I don't think it's comparable.