It looks like you're using an Ad Blocker.

Please white-list or disable AboveTopSecret.com in your ad-blocking tool.

Thank you.

 

Some features of ATS will be disabled while you continue to use an ad-blocker.

 

Should the Government &Unions be allowing Pre-paying Pensions as a option?

page: 1
1

log in

join
share:

posted on Aug, 10 2014 @ 04:55 PM
link   
I've brought up this topic before, but I still think it needs to be thought over. Right now, no option exists. If a person retires, than they should be allowed a system similar to the lottery. Take a lump sum at a greatly reduced rate or take the monthly payment. And of course, taxes would play a part in it.

As an example, a Sergeant First Class (or E-7) retiring from the military after twenty years would receive $1.2 million dollars over a twenty year period. What if there were a option to cash out at let's say, a 1/4 of that? $250,000 before taxes. That's still some serious money.

That's money that will go right back into the economy, maybe start a business generating even more money. Or maybe the individual will end up dead in a year or two but his family would still get the money (as would the Government once again with death taxes), so it would still end up helping to support local economy.

I think that the savings over the initial cost is better in the long run. Am I making any sense here? I know I would take the lump sum and start out on a new adventure in business.




posted on Aug, 10 2014 @ 05:13 PM
link   
In my union, sheet metal workers, I have the option to cash out my pension which I believe the majority of the members do.

I don't think there is any penalty either, other than early retirement at 55 as opposed to 56



posted on Aug, 10 2014 @ 05:26 PM
link   
I would rather take the pension when I reached a certain age to retire. The hospitals can't take your pension easily but they can take your savings. Retirement also includes insurance coverage sometimes, Employers will do away with insurance coverage if they can.

I know a guy who took a buyout of his retirement, he is now eighty four, retiring at fifty five. His money ran out long ago, he would have been better off with keeping the pension. He was supervisor of the road commission workers and his pension would have been plenty good.



posted on Aug, 10 2014 @ 05:26 PM
link   
a reply to: tinner07

Union wise, I'm sure there are options in some cases. It makes sense.

Governmental pensioners though don't have that option to the best of my knowledge. Companies when downsizing almost always offer a buy-out program for long time employees to retire early.



posted on Aug, 10 2014 @ 06:00 PM
link   

originally posted by: TDawgRex
As an example, a Sergeant First Class (or E-7) retiring from the military after twenty years would receive $1.2 million dollars over a twenty year period. What if there were a option to cash out at let's say, a 1/4 of that? $250,000 before taxes. That's still some serious money.


But about half what he is owed. When you "win" the lottery and choose the pay-out option, it's about half. Say you win $1 million. Your pay out is $500K if you take it immediately as a lump sum. The reason for that is that you never won $1 million in the first place. What the state does is buy an annuity that is invested and pays out the $1 million over (what is now more commonly) 25 years. If you choose the lump sum, they simply give it to you rather than buy the annuity with the same money.

For the record, pensions for public service are already "pre-paid" in that the employee and employer both pay in an amount every month for 25-30 years that "pre-funds" the pension. In other words, it's not "new money" being paid out, but contributions by the employee and his employer that have been invested by the pension fund. When high public service pensions are decried by public and politician alike, they normally conveniently "forget" that it was the employee's money funding it in the first place.



posted on Aug, 10 2014 @ 06:05 PM
link   

I know a guy who took a buyout of his retirement, he is now eighty four, retiring at fifty five. His money ran out long ago, he would have been better off with keeping the pension. He was supervisor of the road commission workers and his pension would have been plenty good.


He sure did. He outsmarted himself, took a near term gain for a long term loss. Not only that, he "beat" the actuarial tables which predicted he would only live into his late seventies. The original worker "pensions" (the equivalent of social security) we're granted at age 65 because THAT'S when you died (by the Kaiser of Germany.) The idea was to provide a small amount of help in case you lived longer than normal. Family was expected to provide for its elders. The pension was to offset food costs.



posted on Aug, 10 2014 @ 06:14 PM
link   
a reply to: schuyler

All true, and you did notice I said 1/4, not 1/2, right? Many monthly pensions, if not most, pay only enough to survive month to month. It's a fixed income. Having the option to buy out would remove that barrier.

Yes, some would squander that money, but it would no longer be the taxpayers problem, other than the ACA if they lived that long. Sad, but true.

Others would use that money to start a new life. Also true.

But overall the Government and taxpayers would win if this option were implemented.

It's all about personal responsibility.



posted on Aug, 11 2014 @ 11:53 AM
link   

originally posted by: TDawgRex
a reply to: schuyler

All true, and you did notice I said 1/4, not 1/2, right? Many monthly pensions, if not most, pay only enough to survive month to month. It's a fixed income. Having the option to buy out would remove that barrier.


Yes, I did, and in fact that was what I was responding to. In your scenario, he COULD get $1.2 million over 25 years OR get a payout of 1/4. That decision would be stupid for him to take. Anyone with half a brain (or a financial counselor) would not do it. And if such a thing were offered widely, the issue would soon become apparent and well-known. Not that some people wouldn't do it, as the 85 year old in that post shows.

But "pensions" is a big word, so YMMV on any given example. And, of course, the trend is downward. But most, if not all, public service pensions that are state-sponsored (which includes all local government from libraries to sewer districts) pay about 2% per year and may have a cap of 30 years, or 60%. Social security is much more modest, but in combination with the former, plus the reduced costs of not working, means your take-home at retirement is at or above what it was when you were working. A pension by itself is one leg of a three-legged stool. That's what it was designed to be. Of course, not everyone pays attention and winds up depending on a single pension.

This is a complex subject and I don't want to get too far afield here. I've tried to stay factual and not get into judgmental stuff. But the 1/4 pay-out is not something that would work.



posted on Aug, 11 2014 @ 04:28 PM
link   
a reply to: TDawgRex

construction unions pension's are usually decided on by the membership, and administered by the union itself. manufacturing unions usually have there pensions administered by the corporation. that's how judges are reducing, and eliminating those pensions, the corporation has control of the money. as a electrician, in my local, I can take my pension at age 55 in 5% increments to 100% if I choose. options are determined by administration, not recepient, and will be to the administrators benefit.



posted on Aug, 11 2014 @ 04:42 PM
link   

originally posted by: TDawgRex
a reply to: schuyler

All true, and you did notice I said 1/4, not 1/2, right? Many monthly pensions, if not most, pay only enough to survive month to month. It's a fixed income. Having the option to buy out would remove that barrier.

Yes, some would squander that money, but it would no longer be the taxpayers problem, other than the ACA if they lived that long. Sad, but true.

Others would use that money to start a new life. Also true.

But overall the Government and taxpayers would win if this option were implemented.

It's all about personal responsibility.


The government isn't going to save squat! When the retiree who took the lump sum payout outlives the money, he/she will inevitably reach the point that they need and qualify for, welfare programs like low income housing, food stamps, etc., made available by the government. So in essence, whatever you think you saved by offering a reduced lump sum payout ends up being spent when he/she needs government assistance.

Unless of course you're talking about eliminating all government sponsored welfare and public assistance at the same time and if that's the case, it's really nothing new. The GOP has been trying to accomplish that for generations.



posted on Aug, 11 2014 @ 04:59 PM
link   
a reply to: Flatfish

That point has already been made. I'm just floating an idea out there. I didn't say it would be the cure all. Just a option. I think of it this way. Chances are I won't live past the next ten years, but then again, maybe I will. It's a gamble.

And I do like the idea that another member posted, a financial counselor should be made available during the decision process. to point out the pluses and minues. That way no one could say that they were hoodwinked into taking the cash-out option due to hardships. Money is a finite resource (if ya want to call it that) after all.




top topics



 
1

log in

join