Fairfax county contribute 27.14% towards employee
![[Post New]](/jforum/templates/default/images/icon_minipost_new.gif){kind=icon}
Anonymous
|
Someone mentioned not long time ago that Fairfax county employee super excellent benefit, including 27% contribution from county government for retirement account. I just found it: https://www.fairfaxcounty.gov/retirement/employees-retirement-system I have to say I am completed shocked: one side is Fairfax county asking residents to pay more in the name of school budget shortage, but on another side, they are so generous towards themselves. Even you work for the top companies in the world, I cannot imagine they would contribute this much towards retirement. Correct me if I am wrong. Is there a way to stop this madness? |
Anonymous
| Those are pension contributions based on the costs they're paying out, not contributions to individual employees' retirement funds. The way to stop it is to get rid of pensions, but then you'd have to up public sector salaries to compensate since pensions and other benefits are part of why people take those jobs for less. And that doesn't solve the problem of paying out existing pension obligations for past employees--you'd need a tax or some other way to fund that. |
Anonymous
| 25% is normal. |
Anonymous
Robbing Peter to pay Paul |
Anonymous
Certainly some still do. Many used to. |
Anonymous
How pensions have (or haven't) been managed over the years is another thread entirely, but broadly, pensions were (and sometimes still are, especially in the public sector) part of the compensation package that was offered to employees. Those were costs that had to be paid by the people of Fairfax County sooner or later. Most private sector companies have done away with pensions for newer employees and just pay more in straight salaries and retirement contributions instead because it's much easier to manage, and up salaries instead so that people can fund their own retirements--there's certainly a case to be made for that too. But it's not like pensions are just free money for the employees--they worked on the condition that they would be paid in retirement. |
Anonymous
They can chose to terminate the plan. Existing retirees would be offered an annuity or a lump sum payment. I haven’t looked into all of the public information on Fairfax’s pension but most plans nowhere near fund the full obligation every year so there would be a large payment due in order to terminate the plan as it has to be fully funded at termination. But plan termination won’t happen. All of the counties close to Fairfax would essentially has to agree to do the same thing in order to prevent an exodus to other jurisdictions. |
Anonymous
This, basically. Everyone has to do it, and then you have to make sure salaries are comparable to private sector or you'll get an exodus that direction for those employees who can move that way. It's not clear that it's necessarily a net gain to taxpayers if the end goal is to continue to provide the same services. (Now, you can just decide to cut there instead and reduce your staffing, which will in turn reduce your future pension obligations. So there's that option too.) If there were easy solutions, they would have been put into place already. Even the private sector corporations who no longer offer pensions are still paying them for existing retirees out of their bottom lines (Sears pensions are reportedly even going to survive bankruptcy!) |
Anonymous
|
I have a friend who work for Fairfax. He mentioned the County has reduced pension benefits for incoming employees and are ALWAYS looking for oportunities to reduce pension liabilities for future. Believe me, the County is well aware the existing pension plan is too generous and there is no way they can sustain it into future. Other local governments are doing the same. Just like the private sector, local and state govt pensions are slowly migrating to self managed plans such as 401/457/403b, etc.
|
Anonymous
| That may be how they calculate the per-employee contributions into the overall pension fund. Not necessarily correlated to what an individual employee gets paid out (if anything) at the end. The public pensions are state managed in Virginia. |
Anonymous
I take it back, some jurisdictions opt out of the state retirement system (VRS). Looks like Fairfax teachers are in and county workers and police are out. Too bad, VRS is very stable and well funded. |
Anonymous
This. But also realize that the benefit payout at 25 years of service is half of what it is at 30 years of service (no kidding). Many employees (most) don't make it to 30 years so the 25% is not as much as you may think. |
Anonymous
|
New employees don't have the same pension benefits as older employees. This is sad given that teacher salaries are not going up to compensate for this. |
Anonymous
| How much retirement contribution from county towards new employee? |
Anonymous
They still contribute 27% for every current employee--but that's paying into the pension system to pay current retirees (whose payments are dictated by what was in place when they were first hired, often decades ago). New employees' future benefits are governed by the pension agreement at the time they were hired. If you leave your job, you don't walk away with that money (and you may get a reduced or no pension, even if you were also required to pay into it, as public sector employees usually are--Fairfax Co. employees pay 5% to fund the pension in addition to any individual retirement plans they might have for themselves). Current plans are here: https://www.fairfaxcounty.gov/retirement/sites/retirement/files/assets/documents/a066_comparison%20of%20fc%20retirement%20sysems_7-2017.pdf The way pension systems work at a basic level is that they have to pay out retirees based on whatever conditions they set back when they hired those employees. That costs $x. If a pension system is functioning well (rarely!) then they put money in along the way that has been invested and is covering that. More often, they did not (or borrowed against it, or invested it poorly, or...) and instead they have to put extra in to cover both those costs plus the anticipated future costs for the current employees. It's obviously a little more complicated than that, but that's the issue in a nutshell. Pensions are defined benefits, which are very different from the retirement fund you might have as an average worker without a pension--you get what you get in the end, so if the market crashes, you get less. Pensions instead promise a guaranteed payment (usually a percentage of the average salary in the final years before retirement) so if the investments haven't paid off, you have to make up the difference. The private sector has already moved away from pensions and public sector is slowly following suit, but part of the reasons companies had them in the first place was to create an incentive for workers to stay at the company over many years, or to entice them to stay for lower salaries than they might have had elsewhere. Those are still big issues to contend with, because while pensions cost money, so does employee turnover and so do higher salaries. It's a balancing act to figure out how to keep employees and create a fiscally sustainable organization. |