Reply to FERS pension contribution increase

Forum Index » Jobs and Careers

Reply to "FERS pension contribution increase "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Let's be real, at some point in the future they're just going to do a bit TSP match. They're contributing 15-17% to the FERS pension per person per paycheck. They could do a 15% match on the TSP and still save 5-7% (since they already do a 5% match). That's probably the future federal retirement at some point. I doubt they keep a pension forever.[/quote]

For anyone who's always been contributing 4.4%, you'd have been better off if they allowed you to opt out of the pension. Which was why they raised it to that level.[/quote]

It does substantially change the math. If this passes, I'm definitely leaving government service. [/quote]

It really would be much more honest of them to just abolish the pension for all new employees, because it's a moneymaker for the government for people who have always contributed at the 4.4% level. A pension sounds nice in theory, and gives MAGAs an additional reason to hate government employees (maybe that's the reason they keep it around), but at 4.4%, most people simply will not come out ahead.[/quote]

As some who arrived just after 4.4 was implemented, I think I’d rather have the pension.[/quote]

That's because you haven't done the math on it. It's just not a good deal. Maybe if you're young and plan to stay in government for 40+ years, it might be a good deal for you, but you'd be in a very small minority.

Plus, if they can just increase the contribution level for existing employees, who even knows if they'd keep you at the 4.4% level over a 40-year government career. Probably the next step in this vicious cycle is that, once everyone is paying 4.4%, they'll increase that rate. [/quote]

Wouldn’t being young cut the other way?  The younger you are the more time you have for the extra 4.4% to grow over time and to (at least in theory) increase in value in a TSP-like vehicle, whereas if you are older you have less time for growth so the flat pension rate might be more appealing.

But more fundamentally, how are you calculating the value of knowing you will never run out of money and will have payments for life v. a TSP which has a set amount and you can exhaust?

You could also say that you would be better off not paying SS tax and being able to invest that money in a retirement account instead of getting SS.  But from an individual (and societal) standpoint, there is real value in knowing those payments will always be there.[/quote]

Can you agree that there's a percentage that would be so high that the pension would be a bad deal? Surely, if they wanted to deduct 50% from every paycheck and use the same formula, that would be a bad deal? So it's not as simple as saying, "well, great, I have a pension and I'll never run out of money." A pension can be a bad deal. Don't simply assume that paying 4.4% and getting something called a pension is a good deal.[/quote]

Of course, at some point, it isn’t a good deal.  Care to share your math or a reliable cite saying 4.4% is that point?

Also, there isn’t necessarily one universal point.  People have different risk tolerances.  People have vastly different life expectancies.  People plan to retire at different ages. Etc.[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics