Income equality: abolish pensions based on having been a government employee

[sallybutler]

In your wife’s case, why didn’t she go work for a private school where there was no union instead of staying at a job where her work ethic was being abused?

 

[BobCatholic]

Just to add a little to this, doctors these days have a variety of asset protection vehicles (partnerships, trusts, etc.) so they won’t lose their homes and personal wealth in a malpractice lawsuit.

Partnerships split the liability over each partner per stripes. Doesn’t eliminate it.

Even if they have protection, the government doctors don’t have to worry about this, and this is a huge advantage to them.

 

[BobCatholic]

I would rather have an unstable salary of $500K than a stable salary of $50K.

You won’t get to keep much of that 500K. That is gross, not net. Net is who knows? Do the math. After costs you won’t make more than the stable salary.

And the stable salary is more than 50K.

Source for stats showing how “frequently” this happens? Unqualified comparatives are not very useful.

First, you accept the 500K figure from an “unqualified comparative” without any questioning now all of a sudden questioning the other side? Please.

Double standard.

 

[signit]

Partnerships split the liability over each partner per stripes. Doesn’t eliminate it.

Even if they have protection, the government doctors don’t have to worry about this, and this is a huge advantage to them.

I agree with the main argument, that government doctors have the advantage that they don’t have to worry about it.

But I still say, doctors don’t very often lose their personal assets in malpractice cases, because malpractice cases are hard to prove and usually lose, and doctors are savvy enough to protect their personal wealth. I think there’s this myth out there that there are all these “frivolous lawsuits” against doctors and that the kindly doctor in your town is in danger of financial ruin, when that rarely happens.

 

[BobCatholic]

I agree with the main argument, that government doctors have the advantage that they don’t have to worry about it.

But I still say, doctors don’t very often lose their personal assets in malpractice cases, because malpractice cases are hard to prove and usually lose, and doctors are savvy enough to protect their personal wealth. I think there’s this myth out there that there are all these “frivolous lawsuits” against doctors and that the kindly doctor in your town is in danger of financial ruin, when that rarely happens.

Again, you talk in detail about one variable in the equation, while ignoring the others.

Income = Revenues minus expenses.

Net income = income - taxes

Net income is what the doctor pays his/her living expenses with.
That part is guaranteed and stable in a government job. Not in a private sector doctor’s office.

Revenues: Those are being squeezed with lowered reimbursements from Medicaid, Medicare and private insurance. In Illinois, for example, Medicaid takes 9 months MINIMUM for reimbursements. Try paying your bills waiting 9 months for a paycheck.
You don’t need a malpractice settlement to ruin a doctor, just every day business can do it.

Expenses: Continue to rise, with malpractice costs being one of the variables, and lawsuit costs too. Regulatory costs are increasing big time. Hiring staff to do all that administrivia goes up in costs.

Taxes: Those are going up. Guaranteed. Cronies want more money so politicians raise taxes.

So stagnant to declining revenues and increasing costs and taxes, what do you think that means to a doctor’s livelihood? Do the math.

No wonder private sector doctors are retiring in droves.

 

[stinkcat_14]

Again, you talk in detail about one variable in the equation, while ignoring the others.

Income = Revenues minus expenses.

Net income = income - taxes

Net income is what the doctor pays his/her living expenses with.
That part is guaranteed and stable in a government job. Not in a private sector doctor’s office.

Revenues: Those are being squeezed with lowered reimbursements from Medicaid, Medicare and private insurance. In Illinois, for example, Medicaid takes 9 months MINIMUM for reimbursements. Try paying your bills waiting 9 months for a paycheck.
You don’t need a malpractice settlement to ruin a doctor, just every day business can do it.

Expenses: Continue to rise, with malpractice costs being one of the variables, and lawsuit costs too. Regulatory costs are increasing big time. Hiring staff to do all that administrivia goes up in costs.

Taxes: Those are going up. Guaranteed. Cronies want more money so politicians raise taxes.

So stagnant to declining revenues and increasing costs and taxes, what do you think that means to a doctor’s livelihood? Do the math.

No wonder private sector doctors are retiring in droves.

So the question is: Is the $500k the cardiologist brings in revenue or income? And please document which it is. If it is income, it is after malpractice insurance has been paid. If it is revenue it is before.

 

[BobCatholic]

So the question is: Is the $500k the cardiologist brings in revenue or income? And please document which it is. If it is income, it is after malpractice insurance has been paid. If it is revenue it is before.

If the $500k figure is accurate (someone in this thread mentioned this number) - if the doctor is LUCKY, it is revenue. I don’t think a doctor’s revenue is THAT high.

If it is net income, this doctor is not sleeping, because he’s working 24-7. So it cannot be net income.

 

[stinkcat_14]

If the $500k figure is accurate (someone in this thread mentioned this number) - if the doctor is LUCKY, it is revenue. I don’t think a doctor’s revenue is THAT high.

If it is net income, this doctor is not sleeping, because he’s working 24-7. So it cannot be net income.

So the answer is you don’t know what their revenue or their income is.

 

[BobCatholic]

So the answer is you don’t know what their revenue or their income is.

I used the $500K figure what the poster said. I don’t think that is reasonable as a gross figure, given declining reimbursement rates for Medicare, Medicaid and private insurance, especially under the ACA. If someone is making $500K revenue, they’re working 24-7 with no time to sleep.

Revenue depends on number of patients, what insurance they have, collectibility of accounts, number of discounts given (99% do not pay full retail), and the like. Add to this revenue uncertainty, how long it takes to get the reimbursements. If a doctor takes medicaid patients in Illinois, they have a minimum 9 month wait to get paid. Try paying your bills and staying alive while waiting 9 months for a payment.

Expenses include: office rent, payroll for clerks and receptionists, legal and professional fees, utilities, HIPPA and other regulations compliance, and the like. This varies from doctor to doctor.

Then subtract from this gross income, social security taxes, state taxes, federal taxes, ACA taxes, and other payroll taxes (i.e. head tax on employees, etc.)

What’s left is net pay, what goes into the doctor’s pocket. This fluctuates from month to month and year to year, with no stability.

I know that $500K cannot be net, too many expenses to make that happen. I may not know the exact figures you’re asking for, but I know what those figures comprise of.

 

[on_the_hill]

In your wife’s case, why didn’t she go work for a private school where there was no union instead of staying at a job where her work ethic was being abused?

Private school teacher salaries are abysmally low. They’re probably no more than half a public salary.

 

[sallybutler]

Private school teacher salaries are abysmally low. They’re probably no more than half a public salary.

I realize that. But if the private schools are a better working environment, wouldn’t it be better to work there instead of for the public schools, no matter what the wage?

 

[GratefulFred]

My 2nd career was as a public pension fund auditor with a CPA license and more than 20 years experience auditing actual pensions.

My 20 plus years of matching actual payroll records to the law tells me that more than 98% of the pensions are correct according to the law. We chased down that 2% in error and got them corrected - reduced to the law and overpayments were collected back. Most of the errors appeared to be from ignorance the law - poor training - and few seemed to be intentional rip offs. Every finding I was involved with was accepted or sustained after review by courts.

There are two types of pension plans - 1. Defined Benefit (DB), 2. Defined Contribution (DC). 100 years ago there were extremely few pension plans of any kind. Some 50 years ago - the 1960s - many large companies as well as governments had DB plans. Now, very few companies have DB plans, they switched to DC plans.

The difference is who bears the risk when we experience an extended down stock market period. In a DC plan - 401k, IRA - the individual member bears the risk and can go broke. In a DB plan, the plan bears the risk and hopes to recover over time while the member continues to get the promised pension benefit. In a word, the difference is SAFETY. Hard to go back to work to make up a severe loss at age 75 or 80, or older.

To have a decent retirement, one needs 80% of pre-retirement income in retirement. A typical DB Plan uses a formula: Years of service times an age factor times pre-retirement income. If the age factor is 2% then one must work 40 years to earn 80% of pre-retirement income. If one works just 20 years then it is 40% of pre-retirement income. The DC plans have no such formula. A DC retirement is based on whatever amount was contributed and earned in the stock market. Market goes down, the amount available to live on goes down. Very Risky. If you live too long, you may have used it all.

To properly fund a retirement, the annual contribution must be between 15% and 20% of annual earnings over that 40 year working career to get the 80% retirement. Generally both the member and employer contribute. If one contributes only 20 years, the retirement will be so much lower.

Here’s the problem, IMO: If retirees in a DC plan run out of money to live on, who picks up the slack? They will seek government support. If the government has to pay the bill then, it is only prudent to save up for it over the working years. That’s why we created retirement plans. The catch is: 1. Must participate for many years - 40 years typical. 2. Must actually put the 15% to 20% in each year. 3. Must leave it there. 4. Must be properly managed.

Some here say that government employees have it too good. I would say the private sector does not have it good enough. To proper fix is not to tear down the DB Plans, but rather demand better private company plans.

 

[Monte_RCMS]

My 2nd career was as a public pension fund auditor with a CPA license and more than 20 years experience auditing actual pensions.

My 20 plus years of matching actual payroll records to the law tells me that more than 98% of the pensions are correct according to the law. We chased down that 2% in error and got them corrected - reduced to the law and overpayments were collected back. Most of the errors appeared to be from ignorance the law - poor training - and few seemed to be intentional rip offs. Every finding I was involved with was accepted or sustained after review by courts.

There are two types of pension plans - 1. Defined Benefit (DB), 2. Defined Contribution (DC). 100 years ago there were extremely few pension plans of any kind. Some 50 years ago - the 1960s - many large companies as well as governments had DB plans. Now, very few companies have DB plans, they switched to DC plans.

The difference is who bears the risk when we experience an extended down stock market period. In a DC plan - 401k, IRA - the individual member bears the risk and can go broke. In a DB plan, the plan bears the risk and hopes to recover over time while the member continues to get the promised pension benefit. In a word, the difference is SAFETY. Hard to go back to work to make up a severe loss at age 75 or 80, or older.

To have a decent retirement, one needs 80% of pre-retirement income in retirement. A typical DB Plan uses a formula: Years of service times an age factor times pre-retirement income. If the age factor is 2% then one must work 40 years to earn 80% of pre-retirement income. If one works just 20 years then it is 40% of pre-retirement income. The DC plans have no such formula. A DC retirement is based on whatever amount was contributed and earned in the stock market. Market goes down, the amount available to live on goes down. Very Risky. If you live too long, you may have used it all.

To properly fund a retirement, the annual contribution must be between 15% and 20% of annual earnings over that 40 year working career to get the 80% retirement. Generally both the member and employer contribute. If one contributes only 20 years, the retirement will be so much lower.

Here’s the problem, IMO: If retirees in a DC plan run out of money to live on, who picks up the slack? They will seek government support. If the government has to pay the bill then, it is only prudent to save up for it over the working years. That’s why we created retirement plans. The catch is: 1. Must participate for many years - 40 years typical. 2. Must actually put the 15% to 20% in each year. 3. Must leave it there. 4. Must be properly managed.

Some here say that government employees have it too good. I would say the private sector does not have it good enough. To proper fix is not to tear down the DB Plans, but rather demand better private company plans.

There is a third category of employees … people who are on their own.

Often they are temps.

Or they may be temps for a while at one point, and then employees of some small contractor at another point.

Over their careers, they may have a dozen or more “employers”. Or they may even be independent contractors.

There is even a group that publishes a weekly magazine. Contract Employment Weekly.

Not employees of any one company.

Even as temps, they may work through any number of employers or employment agencies.

They must fund their own pension plans.

And when they take money out … they must be extremely prudent.

The best approach would be a tax policy that benefits ALL different categories of workers. Regardless if they are government employees, or company employees, or people who are caught in between.

 

[Monte_RCMS]

There is also a fourth “category” … people who have limited education and a short time horizon who basically work doing manual labor.

They want to be left alone. And they are willing and able to work. Strong work ethic. They do not want to participate in welfare. And they do not want charity.