For years we have heard about the sacrifices made by government employees to help the public.  How can this be true when television news has reported that their salaries can be 1.5 times higher than an equivalent job in private industry?  Until recently I did not know that some retired federal government employees received pensions as high as $200,000 per year.[1]  In 2014 the Presidential pension was set by Congress at $201700 per year.  Who designed a pension plan that pays a retiree as much as an ex-President and very likely more in retirement than that individual was paid while still working?  Is that a sacrifice?  I don’t think so.  This pension is a waste of taxpayer money and Congress and the President are at fault.

Years ago when private industry was struggling with their pension obligations, many companies decided that they might have problems staying in business if they continued with a defined benefit pension plan.  So when the idea of a defined contribution 401k plan was conceived in 1980, it became a retirement vehicle that would allow a company to stay in business.

With the collusion between corrupt politicians and unions, the re-election objective of existing politicians and the union avarice is so strong that together they selfishly agree to future pension benefits that both parties know will bankrupt their communities. These people are self serving—not serving the public.  .

The defined benefit pension plan used by many governmental authorities is no longer economically viable and all government worker retirement benefits must be converted into a defined contribution 401k pension.  All the politicians and government unions will fight this conversion tooth and nail because this change makes the worker more responsible for his retirement and could eliminate the lush pension candy stick.  All government workers including the President, the Members of Congress, and the Judiciary must have their pensions converted into a 401k.  By the way, our Constitution dictates that those who serve must be paid fairly, but it makes zero mention of any pensions.  Do you think that maybe our Founding Fathers anticipated that all those in government would be there for only a short time so pensions would not be needed?

Only Federal judges have lifetime appointments.  Politics has corrupted the federal judiciary to the point that they no longer deserve lifetime appointments.  Federal judges were given those appointments so they could stay impartial, but that is no longer true.

The insurance for my car, home and health, my utilities, food and taxes all cost more every year, so don’t try to tell me that there is no inflation.  Inflation is why Social Security was amended to have a cost of living inflation adjustment.  The zero interest rates the Federal Reserve has for the huge rich banks helps only banks.  The poor individual saver who tried to save for retirement gets it shoved up his butt because he gets little to no interest on his savings.  Why do you continue to vote for politicians who do that to you?

Defined benefit pension plans have no way to account for inflation.  Unless you have some special benefit provisions, you get the same dollar amount benefit from day one until you die.  Some plans allow you to include a beneficiary to continue to receive your benefit upon your death for a specified number of years.  For instance, with a 10 year guaranteed benefit plan starting when your first check is received, your beneficiary would receive the same dollar benefit until the policy has paid benefits for 10 years at which time the payment stops.  In other words, if the retiree with a 10 year minimum plan dies after 9 years, his beneficiary will continue to receive that benefit for 1 year.

Without special provisions, replenishment is not possible with a defined benefit pension.  In the 1970s, there were double digit inflation rates that changed frequently.  Equipment manufacturers would only give you quotes guaranteeing price for a month or two.  Those people on a defined benefit plan were devastated if before the high inflation rates started they had trouble paying their bills.  More recently with the Federal Reserve zero interest rates, people have had to invest in the stock market with its inherent risks to make up for this loss of interest income.

While still a 401k, most companies will allow you to invest in generally conservative mutual funds or an interest paying account.  You select how much money you want to deposit each year within the limits defined by the law.  This gives you the responsibility and some ability to control how large a pension you might receive when you retire.  Since a 401k is a tax free retirement account, there are usually penalties for early withdrawal.  A 401k plan requires that you name a beneficiary so all monies left in your account go to your beneficiary upon your death.

When you retire, you will need to rollover your 401k into an IRA account that allows you to invest monies from the account.  This investment feature of the IRA permits you with wise investments to try to replenish some to all of the monies taken from the account each year for retirement benefits.

For the reasons enumerated above, it is time to convert all government fixed benefit plans to a fixed contribution 401k plan with a maximum government contribution of 5% of yearly salary to try to protect our young people from having to deal with government bankruptcies.  It is time for common sense and financial responsibility to be used by our government.

[1] Some federal pensions pay handsome rewards, USA TODAY, Updated 8/15/2012, By Dennis Cauchon,  USA TODAY and Paul D’Ambrosio, Ashbury Park (N.J.) Press