Still solvent after all these years
September 28, 2016 7:11 AM Subscribe
Wisconsin's unique pension system was "designed like a Swiss watch that winds itself," adjusting payouts based on how well the fund is doing, so as to automatically stay solvent. The architect? Gary Gates, a man so thrifty he would cut out and reverse the collars on his dress shirts when they got too worn.
Walker must be kicking himself for having missed an opportunity to crack it open, extract all that juicy profit (or help his mates do so), and leave the remains of the system to die. As for the poor: the poor will suffer what they must, for that has always been their lot.
posted by acb at 7:33 AM on September 28, 2016 [4 favorites]
posted by acb at 7:33 AM on September 28, 2016 [4 favorites]
I have been paying into one of these contraptions for many years. I hope it being employee-funded makes it harder for me to get railroaded come payout time.......supposedly it is in good shape right now. But there surely are people in the State G who think it would be nicer to take that money than to just squander it by sending out checks.
posted by thelonius at 7:44 AM on September 28, 2016 [2 favorites]
posted by thelonius at 7:44 AM on September 28, 2016 [2 favorites]
There’s just one problem: almost no one understands how Wisconsin’s system works.
"I'd be surprised if there were any (lawmakers here who do)," Gates said. "I would say there were probably only four or five from the entire time I was secretary who clearly understood the system."
This would not be encouraging to me if I were a Wisconsin pensioner.
posted by ghharr at 7:50 AM on September 28, 2016 [8 favorites]
"I'd be surprised if there were any (lawmakers here who do)," Gates said. "I would say there were probably only four or five from the entire time I was secretary who clearly understood the system."
This would not be encouraging to me if I were a Wisconsin pensioner.
posted by ghharr at 7:50 AM on September 28, 2016 [8 favorites]
But there surely are people in the State G who think it would be nicer to take that money than to just squander it by sending out checks.
What I always figure is that many of the people in the state government are also vested in the pension system, and also state pension systems are mostly set up so that it's difficult to just loot the money, unlike private systems. It's not that they can't fuck it up, but it would take longer, be more visible and probably be less complete.
posted by Frowner at 8:11 AM on September 28, 2016 [3 favorites]
What I always figure is that many of the people in the state government are also vested in the pension system, and also state pension systems are mostly set up so that it's difficult to just loot the money, unlike private systems. It's not that they can't fuck it up, but it would take longer, be more visible and probably be less complete.
posted by Frowner at 8:11 AM on September 28, 2016 [3 favorites]
There’s just one problem: almost no one understands how Wisconsin’s system works.
"I'd be surprised if there were any (lawmakers here who do)," Gates said. "I would say there were probably only four or five from the entire time I was secretary who clearly understood the system."
This would not be encouraging to me if I were a Wisconsin pensioner.
I think it might be a feature, not a bug. We see some of the worst outcomes when policy starts with the equivalent of "It's simple..." *. But if it's an obviously complex system, then lawmakers are more likely to say, "Well, shit, I don't know what's going on there, so I'm gonna leave it alone, even if I rail against it on the campaign trail."
* -- For instance, the dumbass "Chop off eight zeroes" approach to explaining the federal budget.
posted by Etrigan at 8:18 AM on September 28, 2016 [6 favorites]
"I'd be surprised if there were any (lawmakers here who do)," Gates said. "I would say there were probably only four or five from the entire time I was secretary who clearly understood the system."
This would not be encouraging to me if I were a Wisconsin pensioner.
I think it might be a feature, not a bug. We see some of the worst outcomes when policy starts with the equivalent of "It's simple..." *. But if it's an obviously complex system, then lawmakers are more likely to say, "Well, shit, I don't know what's going on there, so I'm gonna leave it alone, even if I rail against it on the campaign trail."
* -- For instance, the dumbass "Chop off eight zeroes" approach to explaining the federal budget.
posted by Etrigan at 8:18 AM on September 28, 2016 [6 favorites]
so, the big secret is that they reduce your pension when the return on the fund declines, but do a lot of adjustments so the effect is a little obscured.
this would be a terrible model for, say, social security.
posted by ennui.bz at 9:10 AM on September 28, 2016 [1 favorite]
this would be a terrible model for, say, social security.
posted by ennui.bz at 9:10 AM on September 28, 2016 [1 favorite]
You know, turning the collar on an expensive dress shirt isn't some sign of being uber-frugal, it's just good sense. If you can pay a seamstress a small amount instead of replacing a whole expensive shirt, why not do it?
posted by the uncomplicated soups of my childhood at 9:14 AM on September 28, 2016 [6 favorites]
posted by the uncomplicated soups of my childhood at 9:14 AM on September 28, 2016 [6 favorites]
so, the big secret is that they reduce your pension when the return on the fund declines, but do a lot of adjustments so the effect is a little obscured.
Alternately, the big secret is that they raise your pension when the return on the fund increases.
posted by Etrigan at 9:17 AM on September 28, 2016 [3 favorites]
Alternately, the big secret is that they raise your pension when the return on the fund increases.
posted by Etrigan at 9:17 AM on September 28, 2016 [3 favorites]
You know, turning the collar on an expensive dress shirt isn't some sign of being uber-frugal, it's just good sense. If you can pay a seamstress a small amount instead of replacing a whole expensive shirt, why not do it?
It looks ridiculous because of the collar-stay slots.
posted by JPD at 9:30 AM on September 28, 2016 [5 favorites]
It looks ridiculous because of the collar-stay slots.
posted by JPD at 9:30 AM on September 28, 2016 [5 favorites]
It looks ridiculous because of the collar-stay slots.
Behold! Another argument for the button-down!
posted by thecaddy at 9:38 AM on September 28, 2016 [2 favorites]
Behold! Another argument for the button-down!
posted by thecaddy at 9:38 AM on September 28, 2016 [2 favorites]
so, the big secret is that they reduce your pension when the return on the fund declines, but do a lot of adjustments so the effect is a little obscured.
It's probably easier for retirees to deal with than the state deciding one day, "Surprise! Our massive funding gap has become too large to ignore, so we're cutting your monthly checks in half."
Besides, where should the money go when the pension is over-funded? Back to the taxpayers, or to the retirees?
posted by indubitable at 9:43 AM on September 28, 2016 [1 favorite]
It's probably easier for retirees to deal with than the state deciding one day, "Surprise! Our massive funding gap has become too large to ignore, so we're cutting your monthly checks in half."
Besides, where should the money go when the pension is over-funded? Back to the taxpayers, or to the retirees?
posted by indubitable at 9:43 AM on September 28, 2016 [1 favorite]
well the idea isn't to have just barely enough money to keep it afloat....if it's over-funded, wouldn't that money be reinvested?
posted by thelonius at 9:47 AM on September 28, 2016
posted by thelonius at 9:47 AM on September 28, 2016
If you can pay a seamstress a small amount instead of replacing a whole expensive shirt, why not do it?
Well, if it's a well-made shirt, the bottom part of the collar will be slightly smaller than the top of the collar to account for turn of cloth. A reversed collar won't sit or fold over correctly and the edges will look uneven.
posted by yeahlikethat at 9:52 AM on September 28, 2016 [4 favorites]
Well, if it's a well-made shirt, the bottom part of the collar will be slightly smaller than the top of the collar to account for turn of cloth. A reversed collar won't sit or fold over correctly and the edges will look uneven.
posted by yeahlikethat at 9:52 AM on September 28, 2016 [4 favorites]
If you can pay a seamstress a small amount instead of replacing a whole expensive shirt, why not do it?
Because it's one more goddamn thing to think about and who has time for that shit?
posted by Anticipation Of A New Lover's Arrival, The at 9:54 AM on September 28, 2016 [9 favorites]
Because it's one more goddamn thing to think about and who has time for that shit?
posted by Anticipation Of A New Lover's Arrival, The at 9:54 AM on September 28, 2016 [9 favorites]
"so, the big secret is that they reduce your pension when the return on the fund declines, but do a lot of adjustments so the effect is a little obscured."
And it never dips below a minimum. And it's a shared risk. In the meantime, I feel like Illinois we have people fighting tooth and nail to keep their unreasonably high pensions while the rest of us with normal pensions suffer and the whole state descends into chaos.
posted by melissam at 10:03 AM on September 28, 2016 [2 favorites]
And it never dips below a minimum. And it's a shared risk. In the meantime, I feel like Illinois we have people fighting tooth and nail to keep their unreasonably high pensions while the rest of us with normal pensions suffer and the whole state descends into chaos.
posted by melissam at 10:03 AM on September 28, 2016 [2 favorites]
What I always figure is that many of the people in the state government are also vested in the pension system, and also state pension systems are mostly set up so that it's difficult to just loot the money, unlike private systems. It's not that they can't fuck it up, but it would take longer, be more visible and probably be less complete.
I think the real secret is to ensure that the pension fund is pooled across all the public service jobs. Don't allow the police or firemen to have separate pensions. That way the people in uniform have to stand along side the teachers rather than cracking their heads at protests.
posted by srboisvert at 10:18 AM on September 28, 2016 [16 favorites]
I think the real secret is to ensure that the pension fund is pooled across all the public service jobs. Don't allow the police or firemen to have separate pensions. That way the people in uniform have to stand along side the teachers rather than cracking their heads at protests.
posted by srboisvert at 10:18 AM on September 28, 2016 [16 favorites]
You know, turning the collar on an expensive dress shirt isn't some sign of being uber-frugal, it's just good sense. If you can pay a seamstress a small amount instead of replacing a whole expensive shirt, why not do it?
What are people doing to their shirt collars? By the time my shirt collars are visibly worn, so is the rest of the shirt and the whole thing needs replacing anyway.
I don't know if there's a pension-system allegory hidden in there somewhere but FWIW...
posted by Greg_Ace at 10:28 AM on September 28, 2016 [2 favorites]
What are people doing to their shirt collars? By the time my shirt collars are visibly worn, so is the rest of the shirt and the whole thing needs replacing anyway.
I don't know if there's a pension-system allegory hidden in there somewhere but FWIW...
posted by Greg_Ace at 10:28 AM on September 28, 2016 [2 favorites]
And it never dips below a minimum. And it's a shared risk. In the meantime, I feel like Illinois we have people fighting tooth and nail to keep their unreasonably high pensions while the rest of us with normal pensions suffer and the whole state descends into chaos.
Your feel is wrong.
Those people negotiated their compensation and then did the work to earn it. That the pols ( and the public who voted for them in) systematically failed to make required contributions for twenty plus years and counting while dropping big coin on lovely public parks and such doesn't change the fact that those are obligations that are constitutionally required to be kept. That those same pols refuse to pursue civil action against lenders who looted the public purse during the financial crisis is an even greater example of the selective pursuit of punishment of the working class for what was almost entirely financier and politician irresponsibility.
Go ahead and argue and vote for defined benefit plans in the future if you want but you don't get back out of a deal that people have already traded their entire working lives for.
To even suggest it is shameful and you should be embarrassed.
posted by srboisvert at 10:53 AM on September 28, 2016 [22 favorites]
Your feel is wrong.
Those people negotiated their compensation and then did the work to earn it. That the pols ( and the public who voted for them in) systematically failed to make required contributions for twenty plus years and counting while dropping big coin on lovely public parks and such doesn't change the fact that those are obligations that are constitutionally required to be kept. That those same pols refuse to pursue civil action against lenders who looted the public purse during the financial crisis is an even greater example of the selective pursuit of punishment of the working class for what was almost entirely financier and politician irresponsibility.
Go ahead and argue and vote for defined benefit plans in the future if you want but you don't get back out of a deal that people have already traded their entire working lives for.
To even suggest it is shameful and you should be embarrassed.
posted by srboisvert at 10:53 AM on September 28, 2016 [22 favorites]
One thing I notice: politicians sell people on the idea that some people's pensions, that they negotiated for and earned, are "too high" and should be arbitrarily reduced because "we need the money", etc. And then some other people's pensions are too high, even though they get less, and should be arbitrarily reduced. And then some other people's pensions....If someone paid into a system with the promise that they'd get their benefits, and their benefits are owing to them under law, weakening the protections on those benefits is unlikely to help any person who has earned any kind of pension or social security.
posted by Frowner at 11:07 AM on September 28, 2016 [9 favorites]
posted by Frowner at 11:07 AM on September 28, 2016 [9 favorites]
Bear in mind that "unreasonably high pensions" generally come paired with "unreasonably low wages". That's the tradeoff people make in negotiations -- "I'll take less money now, but I won't have to eat cat food after I retire."
posted by Etrigan at 11:10 AM on September 28, 2016 [10 favorites]
posted by Etrigan at 11:10 AM on September 28, 2016 [10 favorites]
Those people negotiated their compensation and then did the work to earn it. That the pols ( and the public who voted for them in) systematically failed to make required contributions for twenty plus years and counting while dropping big coin on lovely public parks and such doesn't change the fact that those are obligations that are constitutionally required to be kept.
This sort of fundamentally fails to appreciate the game theory at play here. The politicians who had to agree to the pensions are incentivized to overdiscount the future, because for them a scenario where the public sector unions strike and the electorate gets upset is one that sees them voted out of office. Better to keep the peace today, knowing that it probably won't be your concern if the pensions can actually be paid. The same logic lurks in underfunding the plans. Better to cut taxes today or spend funds on transfer payments people feel today, rather than show some financial responsibility and keeping the plan funded.
Of course at the end of the day the funding status of pension plans is basically an exercise in financial modeling. If interest rates go back to 5% there is no "pension crisis."
posted by JPD at 11:46 AM on September 28, 2016 [5 favorites]
This sort of fundamentally fails to appreciate the game theory at play here. The politicians who had to agree to the pensions are incentivized to overdiscount the future, because for them a scenario where the public sector unions strike and the electorate gets upset is one that sees them voted out of office. Better to keep the peace today, knowing that it probably won't be your concern if the pensions can actually be paid. The same logic lurks in underfunding the plans. Better to cut taxes today or spend funds on transfer payments people feel today, rather than show some financial responsibility and keeping the plan funded.
Of course at the end of the day the funding status of pension plans is basically an exercise in financial modeling. If interest rates go back to 5% there is no "pension crisis."
posted by JPD at 11:46 AM on September 28, 2016 [5 favorites]
Which isn't to say that states should renege on their obligations, or that Public Sector employees didn't correctly and reasonably view their pension accruals as a meaningful portion of their compensation.
posted by JPD at 11:48 AM on September 28, 2016 [2 favorites]
posted by JPD at 11:48 AM on September 28, 2016 [2 favorites]
But the same applies to bonds, and defaulting on the rich is considered an utter disaster, while screwing over the average loyal state employee is treated with downright glee by some.
posted by Zalzidrax at 2:44 PM on September 28, 2016
posted by Zalzidrax at 2:44 PM on September 28, 2016
I'm not sure I follow. no one is advocating a default
posted by JPD at 2:57 PM on September 28, 2016 [1 favorite]
posted by JPD at 2:57 PM on September 28, 2016 [1 favorite]
I am pretty sure that if they raided the pension fund now, Walker's packed Supreme Court would happily rewrite any laws or reinterpret the state constitution to say that it was OK. In fact, considering the current fiscal crisis here in Wisconsin, I would guess they will give it a try in the next year or two.
posted by rockindata at 5:26 PM on September 28, 2016 [1 favorite]
posted by rockindata at 5:26 PM on September 28, 2016 [1 favorite]
To even suggest it is shameful and you should be embarrassed.
I have an Illinois pension. Do you?
By the time I collect mine the system will probably be ruined. But that's ok, some people think the people making $100,000 pensions "negotiated their compensation and then did the work to earn it" and the people who make reasonable pensions didn't (spoiler: you don't "negotiate" that kind of pension by being an everyday normal workers).
posted by melissam at 8:26 PM on September 28, 2016
I have an Illinois pension. Do you?
By the time I collect mine the system will probably be ruined. But that's ok, some people think the people making $100,000 pensions "negotiated their compensation and then did the work to earn it" and the people who make reasonable pensions didn't (spoiler: you don't "negotiate" that kind of pension by being an everyday normal workers).
posted by melissam at 8:26 PM on September 28, 2016
Bear in mind that "unreasonably high pensions" generally come paired with "unreasonably low wages".
I've never seen a government job like this and I've worked a lot in government, so I'd love to hear where this comes from. High pensions are for well connected people, low pensions are for those with less powerful unions.
posted by melissam at 8:28 PM on September 28, 2016 [2 favorites]
I've never seen a government job like this and I've worked a lot in government, so I'd love to hear where this comes from. High pensions are for well connected people, low pensions are for those with less powerful unions.
posted by melissam at 8:28 PM on September 28, 2016 [2 favorites]
What are people doing to their shirt collars? By the time my shirt collars are visibly worn, so is the rest of the shirt and the whole thing needs replacing anyway.
I sweat. A lot.
posted by the uncomplicated soups of my childhood at 10:40 AM on September 29, 2016
I sweat. A lot.
posted by the uncomplicated soups of my childhood at 10:40 AM on September 29, 2016
I've never seen a government job like this and I've worked a lot in government,
"Rank & file" IT Jobs in county gov't where I live start at $40,000 and top out at $80,000.
Pension is partially calculated on years served so after 25 years the pension adds another $30,000/yr in effective pay, putting the low starting salary more in line with private.
posted by Heywood Mogroot III at 8:59 AM on October 1, 2016 [1 favorite]
"Rank & file" IT Jobs in county gov't where I live start at $40,000 and top out at $80,000.
Pension is partially calculated on years served so after 25 years the pension adds another $30,000/yr in effective pay, putting the low starting salary more in line with private.
posted by Heywood Mogroot III at 8:59 AM on October 1, 2016 [1 favorite]
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Usually the Republican response to situations like this is "Well, let's create a crisis!"
posted by The Card Cheat at 7:19 AM on September 28, 2016 [24 favorites]