Many new State workers, from police officers to the street cleaners — will retire with retirement benefits less than their counterparts.
Face inflated bills and strained budgets, 45 States have either cut pension benefits or increasing the mandatory retirement plan contributions to the employee, or both, since 2009.
While some of the changes and current state cuts employees and retirees, those most important affecting the new appointments. As a result, those who became firefighters, teachers, and garbage men or others working in the public sector after the reductions take effect you will end up with a much smaller nest egg.
Take California: State Highway Patrol officer hired before September 2010 can retire at age 50 after 30 years on the job with 90% of his salary. The average salary of $ 100,000, which will translate into a pension amount of $ 90,000 annually. But if that same officer hired this year instead, his annual retirement check at the age of 50 years would total $ 60,000. This difference of $ 900,000 over a 30-year retirement.
In New York, the private sector hired officer will retire in April 2012 or later with benefits that are approximately 11% less than someone hired in the month earlier, according to the National Conference of State legislatures. In Pennsylvania, hired in 2011 or later will contribute the same widget on their salaries to their pensions as those hired them but will receive about 20% less come retirement.
In Alabama, state employees hired this year will have to work longer to qualify for retirement benefits , which will be about 20 percent less than those promised workers recruited in the last year-despite the fact that new employees will contribute slightly less out of each paycheck.
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Benefits for employees who are already on the payroll is contractually obligated to major changes will require making an agreement to the negotiating table. Some State laws until the bar reduce benefits for current employees, leaving major new appointments objectives for cost reduction.
"These people are not on the table; the Center for retirement research director Alicia Manel and Cannon Rebecca Frankel in January on cuts to a teacher's pension plans do not have a voice,".
Proponents say that reductions to trim excessive subsidies levels, especially among top earners who have retired six numbers, pension checks.
He said New York City Mayor Michael Bloomberg in a speech in Albany, New York, last year "take away from essential services which our constituents want and deserve (pensions). "We see how they've increased our tax rates across the State, money that comes out of the pockets of people who are working hard to try to make ends meet."
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Many States expanded benefits when she flushes without saving extra cash to fund them. When the recession hit, the loss of major investments slipped along with the establishment of tax revenue can handle the burden of pensions that were much bigger than many States and cities.
In 2010, the gap between what was promised retirement benefits and the amount of money it set aside to finance their capacity of 1.38 trillion dollars, according to Pew.
Even now, critics face States pension cuts could leave millions of future retirees without a safety net. In some States, public sector workers are exempt from social security payments-making pension their main source of retirement security.
"Most of our members, their life savings, said Steven Kreisberg, Director of collective bargaining for the American Federation of State County and municipal employees.
In Louisiana, State Actuaries warned new workers switching to a cash balance pension plan where payments are determined largely by the performance of the invested contributions instead of a percentage of salary to the final factor-since the change reduces benefits for employees who have become disabled or for the family members of employees who die before reaching the age of retirement.
Actuaries wrote "because no social security coverage, this member might very well become a ward of the State because he or she has no other resources available.
The plan, scheduled to take effect in July, is now in limbo after the Baton Rouge judge ruled last month that the law was unconstitutional for not receiving the two-thirds vote of the State legislature. State Governor Bobby Jindal plans to appeal.
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State pension cuts could also have an impact on attracting and retaining future public servants and the quality of applicants.
Before the recession, and studies have shown that public and private sector workers was roughly equal compensation in considering the salaries and benefits, said Jean-Pierre Aubry, Boston College Center "research". "But now, with the cuts, the staff should recognize that there is a chance that they might be getting a worse deal from the private sector," he said.
Manel wefrankl warned in their report on teachers pensions cuts, to cut pension benefits without increasing salaries can hurt the recruitment of quality teachers in public schools.
The report said that "reducing their compensation is not without cost. "It almost certainly will result in lower quality of applicants for one of the most important jobs in the country."
Finance; Investment; Business; Economics
Finance; Investment; Business; Economics
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