Double-dipping? Nope, just more cognitive dissonance

Why do I say that about the debate (excellent Sound of Ideas show this morning on the topic – listen here) that is in the news (Plain Dealer) again? (Read also this Regina Brett column on the topic. She hosted the SOI.)

Because Ohio’s public employment system, with its retirement structure, reflects numerous values we’ve come to accept (loyalty to a job, earning seniority as well as acumen, dedication, sacrifice for public service, reward for that sacrifice) that conflict with what we we’re being told to think doesn’t sound quite right (going back to work for the same entity after one has already worked there long enough to earn the pension into which you and your employer paid) and, for many, doesn’t in fact sound right or feel right or constitute something that is right.

Like any other system anywhere – public or private, for private citizens or elected officials, the the different versions of Ohio retirement pensions can be abused. But categorically reviling the Ohioans who serve their fellow Ohioans is not the answer. And, it must be noted, not all the systems in Ohio are the same or serve the same people, and the rolling into one of the people and the systems is not only inaccurate but unfair to the systems with less abuse.

My biggest unanswered question, which is not addressed anywhere in the PD article or Ms. Brett’s column is: what do those who oppose the current situation suggest should happen when a person reaches the point at which they could retire but knows that they want to continue to work? Does the system allow them to not retire but still get what they would have if they had retired once they do retire? Or would the person be penalized by switching jobs after 30 years and therefore the system provides an incentive to abuse it?

There has got to be a way to make the system flexible enough to give people what they’ve earned and deserved and expect, while also eliminating the potential for perceived abuse of the system.

Because I have to tell you, I’m not exactly sure, even though I’ve read Ms. Brett’s column, as to why it is an abuse, per se. I want to better understand why we’re labeling it abuse if the folks have earned it. I do understand the concern about the retired folks who go back to work taking on jobs that others might be able to do, others who would otherwise leave Ohio. But do we have numbers on that or any statistics at all as to just how often that’s happening? Anecdotes would be fine for starters.

9 thoughts on “Double-dipping? Nope, just more cognitive dissonance

  1. Gentlemen – you’ve provided a great series of comments – thank you – and individual posts at your own blogs. Isn’t that what makes blogging so great? 🙂 (I’m so cheery I know)What strikes me most, though, as I read through the comments again, trying to respond, is that my main problem in suggesting that people who started in a program so to speak and stuck with it for 30 years have some moral or other obligation, if they’re going to go back to work or continue working, to not take the retirement money they believed they’d get at that point, is that we’re changing the rules on them. That’s not fair. It’s just not fair.I can’t tell you how many examples of being a good citizen, following the rules and then getting screwed because people change the rules for whatever reason, I could give you. I do really hate that – I’m not being facetious here. To buy into a system, give it your time and life and all, and then be told, well, you know – it’s just not working out the way we thought it would…that’s not nice or fair and that’s what I object to regarding changing the rules so people can’t retire and then go back to work.I find the desire to change the rules because of other bad decisions or circumstances beyond our control to be a moral issue – not the so-called double-dipping itself.Do you see what I mean?

  2. Well, I know some people my age who are living in big houses with several bathrooms even after their children are grown, actually some even have a second house for vacations, while young families are living cramped in apartments. Some of these families are even homeless. Maybe we can start helping out the younger generation by those with the largest incomes giving up their big houses to the families with kids. Then those people who have fat 401K plans socked away for their retirements that their employers helped to fund through consumers paying high prices for their products can give up some of that money to fund social security for the elders who won’t have enough to live on.Somehow, I don’t think most of the public employees who are retiring then continuing to work are the greediest people out there. Just a hunch.

  3. Dave:Americans of my generation (I’m in my 50s) need to come to grip with the reality that the world has changed in very fundamental ways during our lifespan. The Social Security system and pension economics were developed at a time when lifespans were shorter and birthrates among the working class were higher. The math worked out for our parents and grandparents because all those kids could easily fund the cost of supporting the elders for the few years they lived past retirement age.Boomers like me are living decades past ‘retirement age’ but having fewer kids. There are lots of kids in America these days, but more and more of them are starting out life in poverty. Because the blue collar manufacturing segment of our economy has mostly evaporated, there are not a lot of opportunities for a kid coming from poverty to earn a decent wage in a factory when they leave school. If they don’t get a decent primary/secondary education and find a way to fund their college, kids who start in poverty are likely to live out a life in poverty, being supported all their lives by government hand-outs.So if we manage to get our kids through college, and they find jobs paying a decent wage, more and more of their paycheck is going to need to go toward funding public and private retirement plans, as well as the welfare problems. They won’t get to dig out until our generation dies, and that’s apt to be another 40 years, when they themselves will be approaching their ‘retirement age.’The science fiction writers anticipated all this decades ago. The movies ‘Soylent Green’ and ‘Logan’s Run’ both suggest that the way we come to deal with old age is to outlaw it. When one reaches a certain age, you report to a suicide station and end it all voluntarily. ‘Soylent Green’ presents an even more gruesome scenario. Most species on this planet die soon after reproduction and the necessary transfer of knowledge to the next generation. Humanity was also in balance until a few hundred years ago. Now we are the most out of control species on the planet (which Mother Nature never tolerates for long).In an infinite number of ways, the world has changed. While I am fundamentally a free-market capitalist, there is undoubtedly a place for public policy that keeps the train from derailing. We unfortunately have been so self-absorbed in our gluttony that we have let a parade of idiots fill the White House and Congress rather than recruiting strong leaders who guide us through moderation and difficult choices.I guess I would say this to anyone who thinks they have a right to retire and just fish and play golf for the rest of their lives: You can’t – we owe it to our children to leave them a world which is better able to sustain itself than the one we have right now. Rather than taking a pension and still continuing to work for more money, why not donate your time to tutor kids in the inner city schools? How about building Habitat for Humanity houses? Why not run for office?Please don’t take this as a personal attack. We don’t know anything about what kind of person the other might be. Rather, this is commentary for the whole of our generation. We have a lot of work to do.PL

  4. Paul, I believe that younger workers’ contributions pay current retirees to a certain extent. But I also know that the system has a pretty large surplus that would allow it to pay out for a while. But I don’t really see what that has to do with double dipping. Maybe I’m not getting your point.You say: And how does all that fit into your question of the morality of double-dipping? At an individual level, my take is that if the rules allow a person to double-dip, then go for it. But I also think that when we talk about this at a national policy level, the moral questions have to do with how our generation is bankrupting our children’s to fund our excesses. I think that the federal and state government should lead the way by increasing the retirement age for non-military federal workers by one year every two years until it reaches 90% of the life expectancy of the average American. State and local governments can then follow suit (pressured by their voters). Such a policy would have little impact on private industry because fewer and fewer of us are getting defined benefit pensions anyway.Maybe I need a tutorial, but I don’t get it. How is a teacher coming back to work robbing the next generation? Yes, it lowers the pool of jobs available to younger workers, but I don’t get your point beyond that.

  5. JMZ:Your questions are good ones, but at the end of the day I think it is fundamentally wrong that someone can receive a public RETIREMENT pension and continue to receive a public paycheck (notice how I emphasized retirement).Retirement is retirement and the group of 35,000 or so public employees that double dip are betraying the concept of the pension in the first place.I posted on this last week on on my site along with a politically expedient way to solve the problem. If you read the post, I would be interested in hearing your thoughts.w

  6. Dave:You say that public employees who retire are paid solely through the drawdown of the earning and principal in their individual accounts. Do you know how that actually works? Is 100% of the money in the employee’s account used to purchase an annuity? How is inflation factored in — does the annuity seller assume this risk, or is the retiree not protected from inflation? Or does the retirement system dip into younger members’ accounts to pay cost-of-living adjustments on the assumption that when those younger members retire, there will be still younger active plan members paying into the fund, covering the shortfall (as is the case with Social Security).I guess I’m skeptical that any retirement plans are really self-funding at an individual retiree level these days. Otherwise why not just give the retirees a lump sum equal to 100% of their account balance, and let the retiree figure out what to do on their own. That sure would cut down on administrative costs for the pension plan. This is the way defined contribution plans work, which is about the best a worker in the private sector can hope for these days.But my understanding is that retirees in defined benefit systems who do decide on a lump sum payout typically get a discounted amount — a strong indicator that current workers are subsidizing the benefits of retirees.PL

  7. Jill:Those of us of the Boomer generation need to get over the notion that a pension is a ‘right’ — that we have paid our due to society by working until we are sixty-five or so, and therefore deserve to be taken care of forever after. The economics just aren’t going to work out for us unfortunately. Although pensions were in existence beforehand, they really came into play after WWII when employers used them to compete for workers. For our grandparent’s generation, a pension plan which allowed a worker to retire at 65 and then be paid for life didn’t present much of a burden because their life expectancy was only 63. Some calculate that the same deal for our generation should require us to work until our mid-eighties.As you know, school economics is my primary interest, and pensions play heavily into that as well. In our school system, a teacher can retire with 30 years of service and receive 66% of the ‘average final pay’ for the rest of their lives, along with health benefits. A friend of mine and his wife both retired from teaching in their mid 50s and are together receiving over $100K/yr in pension pay, plus health coverage. I don’t care what kind of crummy pay they earned when they started teaching – this is a great deal. And there is an excellent chance that they will be retirees longer than they were teachers.Our school system is heading for a $40 million/yr operating deficit according to the Treasurer, and this year the teachers’ union contract is up for renegotiation. The main issue is going to be heath insurance and retirement benefits costs, and who pays for it. Not so many people are going to be willing to support the teachers when they gain better knowledge of their current compensation and retirement plans. I find it interesting that it’s not the young teachers who are militant about their pay, it’s the 40-50 year olds who are trying to protect their sweet deal. I understand that. I just wish they would say this instead of saying they’re trying to protect the young teachers just starting their careers.Compare this situation to that of my 64 year old brother who worked for a private corporation for nearly 40 years with the promise of a reasonable pension, like our father and grandfather before us (Granddad retired at 63 and lived to 95). My brother’s employer went belly-up and took the pension fund down with it. So instead of the comfortable life he thought he earned for his decades of service, he’s getting cents on the dollar from PBGC and hoping he can make it until he starts receiving Social Security and Medicare at 65. Meanwhile, he has no health benefits.There are few public service roles which deserve a nice pension – the veterans of the armed services come first to mind. But those men/women spend a lifetime taking orders and giving up lots of personal liberty, not to mention shouldering the risk of being asked to lay down their lives as part of their job. That’s not the same kind of job as being a postal worker or a middle manager in the Dept of Redundancy Dept.Public employees have no more right than anyone else (ie none) to expect a pension to be waiting for them when they retire. If a person goes to work for a private employer who offers a defined benefit pension plan, he must assume that it’s a crap shoot whether that pension will really be waiting at the other end. Sometimes that bet will pay off. Other times it might not. The worker has to factor this risk into the decision whether to continue with the current employer, or seek another one.And how does all that fit into your question of the morality of double-dipping? At an individual level, my take is that if the rules allow a person to double-dip, then go for it. But I also think that when we talk about this at a national policy level, the moral questions have to do with how our generation is bankrupting our children’s to fund our excesses. I think that the federal and state government should lead the way by increasing the retirement age for non-military federal workers by one year every two years until it reaches 90% of the life expectancy of the average American. State and local governments can then follow suit (pressured by their voters). Such a policy would have little impact on private industry because fewer and fewer of us are getting defined benefit pensions anyway.Soylent Green anyone?PL

  8. Jill, Glad to hear your thoughts on this. I feel pretty strongly that the system that allows those who have earned retirement benefits to reenter the work force is good for both the employee and the employer. It actually saves the district money by allowing the district to continue to employ the same worker at a much lower cost. One thing people need to get their heads around is that the money the board puts into STRS is still THE EMPLOYEE’S MONEY. It is a benefit that the employee has earned through their work. I never really have understood the attitude that says that an employee who has earned retirements benefits can’t go back to work for the same employer. The employer is not paying the employee twice as many people wrongly assume from the erroneous term “double dipping.” Retirement benefits are not paid by the state but rather out of the personal account earned by the employee him/herself. It’s THEIR money. It’s not a case of being paid twice for the same work as the term “double dipping” implies. I’ll have to read that paper up north and see what they are saying.

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