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Public workers' perkhits taxpayers

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Larrry

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Public workers' perkhits taxpayers
By Thomas Frank, USA TODAYPosted 1d 10h agoReprints & PermissionsGovernment workers in 21 states are using an obscure perk to retire early or to boost their annual pensions by thousands of dollars, which can cost taxpayers millions more in payments to retirement funds, a USA TODAY analysis shows.




The practice, called buying "air time," lets state, municipal and school employees pay to add up to five years to their work history so they are eligible to retire and collect a lifetime pension. Workers already eligible for retirement can buy extra years to boost a pension by up to 25%.

It's called "air time" because workers buy credit for non-existent work, in contrast to policies that let workers buy credit for military service or government jobs in a different state.

Dan Pellissier, a former adviser to California's previous governor, Republican Arnold Schwarzenegger, paid $75,000 in 2004 for five years of work credit. When he turns 55 in 2015, he will get a California pension of $61,536 a year -- nearly $13,000 more than if he hadn't bought air time. That's $320,000 extra by the time he is 80.

"They give away the store here," says Pellissier, now president of California Pension Reform, which is pushing to cut state retirement costs.

Air time is coming under scrutiny as states try to curb retirement spending and make their pension systems resemble private-sector plans. Federal law allows air-time purchases only in government pension plans.

In California, where 34,202 people have bought air time since 2005, Democratic Gov. Jerry Brown recently proposed barring the practice. Kentucky, New Hampshire and Texas stopped or restricted air-time purchases after finding they weren't charging enough for the extra years, which was costing taxpayers money.

Legislatures have allowed air-time purchases as both a perk to workers and an inducement for early retirement. Some states try to make air time cost-neutral to their retirement funds by charging an up-front sum equal to a worker's projected extra lifetime pension payments.

But nine states set the price in ways that could cost taxpayers money. Michigan, Indiana, Montana and Nevada let workers buy air time years before they retire and pay a sum based on their salary at the time. If a worker's salary is higher at retirement, his pension will be based on the higher salary and the state may not have charged enough to break even, says David Driscoll of pension adviser Buck Consultants.

A Montana brochure urges workers to buy air time immediately, noting that "any delay can increase the cost because of … higher salaries."

The New Hampshire Legislature barred air time in 2007 after finding it was costing the retirement system $25million to $40million. "It allowed a lot of people to game the system," state Rep. Kenneth Hawkins says. "That's part of the reason we're $3.7billion underfunded."
http://www.usatoday.com/NEWS/usaedition/2011-12-28-Air-Time_ST_U.htm


And the beat goes on
 

Steve

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I was in a situation in a job I had for a little over five years (federal), I did buy back my retirement, between that and not being able to take more then a day here and a day there I accumulated five years of vacation and sick time.. and hundreds of hours of comp time.. I averaged over 60 hours a week.. I worked when told and didn't turn down hours.. then all of a sudden it was my fault the government owed me well over a years pay.. and that I was earning above annual base executive pay at a part time job..

after six months of them whining, cutting my hours and making me work split shifts, (several days a week and a few hours from 4:30am to 7 or 8 and from 5:30 to 7:30pm .. I decided the hassles were not worth the job..

would it have been fair for them to not pay me for the work I had already done, or pay back the pension I had earned and purchased in good faith?

if the pensions plans were well run, the increased earnings would cover the increased delayed cost.

the fact is when a government gives increased benefits they seldom give additional funding at the time to pay for the benefits..

out here we see police and other government employees who over their careers were discouraged from taking vacation and sick time be vilified at retirement when it was time to finally pay for the given benefit..

had the unused sick time and vacation time been funded when it was denied each year they shortfalls would not exist in current budgets..

perks are a way of keeping good employees but they must be funded when they are earned, not 20 years later..
 

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