Jobs/Career Question - Pension Opportunities

[High Plains Drifter 11024]

On 8/23/2024 at 10:11 AM, CleverNickname said:

State profs pay into TRS, the same teacher pension teachers get. They do also pay into SS which is a real problem for most teachers in Texas. (most school districts don't pay into SS, and that really hurts those retirees).

ERS and TRS has the same formula:

Rule of 80: you can retire when your age + years of service = 80. There are some newer limits for newer TRS hires that penalize retiring before your 60s, but many folks are grandfathered.

The pension pays 2.3% x [highest avg of past X years of service]. So you can't just be in a higher paying position for 1 year. I forget if it's the highest 3 or 5 yrs. But still, take that vice provost position for the final years to juice things (or for a teachers take that AP gig).

So basically a TRS retiree making $100k with 30 yrs experience would get $69k. No COLA. A little more complicated than that since most would take the option for that to pay your spouse until they die, should you die first. My spouse amd I are about the same age, so I think we would get about 94% of that figure (just a basic actuarial calculation). You pay income tax on that pension payout, but not SS or further pension contributions. Since you pay about 10% of the gross pay into TRS, and avoid 6.2% FICA/OASDI and 1.45% Medicare, the net paycheck is not that much less than the $100k making before retire. Less, but maybe closer than yiu may think.

 

I work for a 4 yr university, and this is all correct with a few minor updates: 

Its now up to the rule of 84. I'm grandfathered into the rule of 80 however. And it used to be the avg of three highest salaries, now its avg of five highest. 

What fucks a lot of people on defined benefit plans is that if they also are eligible to collect SS, their SS payment is reduced because of their retirement pay. I'm not sure how that works, but it can screw you pretty good if you aren't aware of it when you are working. 

 

edit to add: You can select various payout schemes: as mentioned above you can reduce your payout and your surviving spouse continues to get your pension after you die. You can also reduce your payout by alot more, and a surviving dependent of your choice, but only one, continues to get your pension until they die. 

I think you also (I need to check on this) can continue on your employers insurance (mine is actually not bad), without their contribution of course, if you retire before the age of medicare. 

 

 

Edited September 18 by High Plains Drifter

[Reagan1k 3024]

On 9/13/2024 at 7:40 AM, 52-80 said:

youre going to have to work for uncle sam or aunt kamala if you want defined-benefits pension

 

The cost to fund and administer a defined benefit plan for a private / for profit entity is huge.  Regulation, reporting, compliance, longer lifespans, etc. all make it very expensive to run a DB plan....and that's on top of filling the funding bucket to provide guaranteed income for all retirees who might live for decades after retirement.

The retirement burden was shifted from the employer to the employee.  Governmental entities can tax their way into compliance and to fulfill obligations.  Private business can't.

[Reagan1k 3024]

Was a lot easier for business to fund when guys retired at 65 and were dead at 72.  

[Nice Guy Eddie 13506]

2 hours ago, Reagan1k said:

The cost to fund and administer a defined benefit plan for a private / for profit entity is huge.  Regulation, reporting, compliance, longer lifespans, etc. all make it very expensive to run a DB plan....and that's on top of filling the funding bucket to provide guaranteed income for all retirees who might live for decades after retirement.

The retirement burden was shifted from the employer to the employee.  Governmental entities can tax their way into compliance and to fulfill obligations.  Private business can't.

While I'm sure that the regulations and reporting are heavy, it's because too many employers played fast and loose with their employees' pensions in the past leaving the taxpayer holding the bag. 

[Reagan1k 3024]

Just now, Nice Guy Eddie said:

While I'm sure that the regulations and reporting are heavy, it's because too many employers played fast and loose with their employees' pensions in the past leaving the taxpayer holding the bag. 

No doubt there are bad actors, and you are correct.  Lots of employers underfunded plans or ran into situations where they could no longer fund them.  It's a heavy weight on cash flow.

My point was that private enterprise (or their shareholders) decided that it was too costly to provide lifetime income to employees and shifted the burden when they had a chance.  Not a judgement either way - just what happened.

When IRC Section 401(k) was enacted into law back in '78, employees could then defer income for retirement, and employers glady started implementing the plans so they could shift the responsibility to the employee.