Defined Benefit Pension Plans

Retirement plans vary. People who had little to live on after their work life had ended lost everything in 1929. They were not the Wall Street speculators who threw themselves out of windows, not to be confused with the speculators of 2008. They were human beings who had worked as miners and waitresses and store clerks and teachers who entered 1930 with nothing.
Enter the 1935 Social Security Act, the “Old-Age and Survivors Insurance” program, as a cushion against abject poverty for those no longer able to work. Other than a start-up seeding of dollars to provide for those already retired or about ready to retire, the old-age and survivors policy was funded by payroll taxes invested in a retirement fund. It is the model for a defined-benefit (DB) pension plan. Social Security then and now was meant to cover to gap if a person’s own retirement savings failed.
Fast-forward to present day savings. Somewhere – before credit cards – saving, not debt, was the long range plan of workers in America. Bank failures, wars and Diners Club pushed the shift, but state and local governments, always being the last to change with societal tends, established the idea of pension plans modeled on Social Security. These, like Social Security, used a worker’s life time and high-five (or other number of years) earnings to calculate a “defined” retirement benefit, based on earnings not savings, and therefore predictable, dependable and guaranteed by law.
Defined benefit pension plans have long been seen as an employment benefit, part of compensation, for otherwise generally lower wage public employment. The funds are controlled by state and local governments, not private – for profit – investment companies or banks. Public employees are hired and work with the understanding that they are earning this benefit, not just getting it.
However, there’s bad news. Social Security and your TRA pension are a bare minimum for retirement. Teachers and other public workers should be saving on their own as well. Current estimates are that a retiree at 66 may expect to live 20 to 25 years in retirement, and perhaps more. One can hardly “plan” for less. To assure financial security over that amount of time, one should have a retirement value of about $900,000, and that might still be too little. It almost certainly will be too little in 5, 10, or 15 years. Social Security and TRA assets will cover about 2/3’s of that. Teachers must still save, early and hard. Better to manage financial hardship at 30 than 80. SAVE.
Your Social Security and Defined Benefit TRA pension benefits are yours. Don’t throw them away and don’t let anyone take them. Without them, you will have to save much, much more and your retirement may still collapse with a bad investment market. Fight for what’s yours.

Humanity is not data-driven

Editorial by the Chair, Jay Ritterson, and does not represent the membership or the work of the Committee of Thirteen

 

There is much concern about the “Learning Gap.” The learning gap is really two undeniable things: a shame for our purportedly egalitarian society and a measurable fact. The ‘shame’ is in many aspects comforting and the ‘fact’ bears all the weight of the fact that there are three sheets of paper sticking out from under my computer monitor. We choose shame; it’s a feature of our Judeo-Christian cultural origins. We worship facts because they are sure and fixed and immutable. And the Learning Gap is characterized by the gap between the objectivity of the facts—data, and the subjectivity of the shame it engenders.

The ninety-second of the Roman Catholic dogma, one of a set of beliefs treated as fact for nearly two thousand years, states, “Original sin is transmitted by natural generation.(1)” We have been working on our inherent shame, treated as fact, since the conceptions of Cain and Abel. Meaning no disrespect for the great good done by Catholicism toward alleviating pain and suffering, The Church has like so many power structures simply cultivated, if not having actually manufactured, a need that it was prepared to meet for a price. Our hereditary shame, our original sin, deprives us of eternal bliss, but the Church provides an avenue to redemption. We need only do a few simple things: admit our undeserving state, accept the course our spiritual leaders offer and behave as we are told. And it’s not just Catholics. Is it?

We must admit to our sin in creating the Learning Gap. And they tasted of the fruits of class privilege and they knew their sin. We must accept the sanctity of the education reform movement. And on the seventh day they will be tested. And we will be redeemed. And the winged graduates ascended into college. And the “big data”(2) pushers should like this neat pattern correlation too. They ‘discovered’ the Learning Gap correlation, after all.

I say “discovered” because I don’t want to go right to the heart of the problem yet. You see, data are facts, and like the number of sheets of paper on my computer desk, they ‘mean’ nothing. When data are gathered, they can be sorted and arranged to create patterns, which in ‘data-ese’ are called correlations. Just before B goes up, A goes down—every time. Correlative fact, no cause, no opinion, just fact. This is the language of statistics, and we remember what was said about statistics, “Select the data that tells us what we want to know.” Could this be the case with the Learning Gap correlation? Could it be that the reason we find a difference in the performance in one racially defined group students from another racially defined group students is because something is or was going on to cause the difference? No. Because there is no cause to correlations, only data patterns. But we want things to have reasons.

“Why,” we ask, “are we here?” not just “Are we here?” Even Church dogma starts out by using the fact that we can ask as proof that there is a reason. Here’s what David Books says, with which I concur, in the New York Times, 16 April 2013:

“…I’m trying to appreciate the big data revolution, but also probe its limits. One limit is that correlations are actually not all that clear. A zillion things can correlate with each other, depending on how you structure the data and what you compare. To discern meaningful correlations from meaningless ones, you often have to rely on some causal hypothesis about what is leading to what. You wind up back in the land of human theorizing.”

Brooks contends that we seek meaning even in the meaningless and cause for the effect, and we do. It is probably deeply rooted in our psyche.

So why is the Learning Gap occurring between white students and students of color? Well, it is: no question about that. But that’s the learning gap: small “l,” small “g.” Why isn’t there isn’t the Learning Gap (capitalized) among rural, suburban and urban students, or between rich and poor students, or among the states or anywhere else that there is a gap? Well, we use race because that gap sticks to our inherent shame, our unresolved racial discrimination that we so proudly – no wait, make that, shamefully – celebrate in this country year after year. So shame can be made useful.

And the policy makers of today, like the Church leaders of the past, know how to leverage their influence and shepherd the sheep. “Close the Gap to relieve your shame.” But it may not be in the interest of that leadership to resolve the Learning Gap; it may be more useful to keep it in play. How much top down management, often in the form of cost containment, has sprung from the Learning Gap Card? Where does the power rest in dealing with the Learning Gap? And here’s the big one – If the Learning Gap were actually closed, what meaningful goal will have been achieved? How will it be more that a statistical non-correlation of data? Will the color lines go away? Will wealth be distributed more equitably? Will opportunity be truly equal? Will the nation become de-Balkanized?

_____

Those who know me know I have been railing against the obsessive elevation of data, the passionate collection to these completely dispassionate pieces of stuff, often with no prior purpose, and the religious commitment to the value of any correlation divined in the data for years now. I am increasingly convinced that data, as the raw material of the Information Age, can be capitalized, that it can be used to our benefit, or abused to cost. Moreover, similarly to iron or coal or oil, data can be manipulated to greedy ends in this Age of Greed.

Don’t let anyone tell you that the data are indisputable and non-judgmental. The choice of which data to bring forward is certainly disputable and the judgment about which correlations to divine must be highly suspect for hidden causes. Humanity is not data-driven.

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(1)   Loughnan, F. John. Dogmas of the Catholic Church, The Divine Work of Creation, The Doctrine of Revelation Regarding Man or “Christian Anthropology,” Revised Feb. 16, 2001. retrieved from http://jloughnan.tripod.com/dogma.htm, 16 April 2013.

(2)   Mayer-Schonberger, Viktor and Kenneth Cukier. Big Data: A Revolution That Will Transform How We Live, Work, and Think, Eamon Dolan/Houghton Mifflin Harcourt; 1 edition (March 5, 2013).

How are they supporting your right to a guaranteed pension?

This is a partial and unofficial list of Minnesota Legislators in the 2013 session who are or have been members of the organization known by the intialism, ALEC. Through the corporate-funded American Legislative Exchange Council, global corporations and state politicians vote behind closed doors to try to rewrite state laws that govern your rights. These so-called “model bills” reach into almost every area of American life and often directly benefit huge corporations.
…..In ALEC’s own words, corporations have “a VOICE and a VOTE” on specific changes to the law that are then proposed in your state. DO YOU?

If you live in one of these districts, these people are supposed to be representing you. Call and ask them how they are supporting your right to a guaranteed public employee pension. Ask them how you would affected by bills they carry forward from ALEC.

Member of Legislative Commission on Pensions and Retirement, Rep. Mike Benson (26B, R)

Rep. Greg Davids (28B, R)

Rep.Matt Dean (38B, R)

Rep. Steve Drazkowski (21B, R)

Rep. Sondra Erickson (15A, R)

Rep. Pat Garofalo (58B, R)

Rep. Andrea Kieffer (53B, R)

Rep. Denny McNamara (54B, R)

Rep. Pam Myhra (56A, R)

Rep. Joyce Peppin (34A, R)

Rep. Linda Runbeck (38A, R)

Rep. Dean Urdahl (18A, R)

Rep. Kurt Zellers (34B, R)

Sen. Bruce D. Anderson (29, R)

Assistant Minority Leader, Sen. Roger C. Chamberlain (38, R)

Sen. Mary Kiffmeyer (30, R)

Assistant Minority Leader, Sen.  Warren Limmer (34, R)

Early Spring – From the Top

This is the first legislative session in a new direction for Minnesota. And we would like to think that this dove bearing an olive branch means it’s all better now, but 40 months and 40 weeks of bad economy will not recede quickly. Certainly the change is hopeful, and shows the good faith the people of Minnesota have shown in doing what’s right and good. However, there remains a serious economic situation, and there is hardly 100% agreement on what to do about it.
Minnesota’s public pension system represents a large amount of money for which the state legislature is responsible. A remaining threat to our TRA pension system is the pressure to abandon this defined benefit plan and replace it with a do-it-yourself personal investment system—for which the state would have little or no financial responsibility. Now, that might be good for investment brokers, who would make millions through fees on teachers’ investments, but would it be good for teachers? Duncan Black says, in a USA Today column, that “401Ks Are a Disaster,” joining a number of other analysts who are not profiting from these personal savings supplement tools, similar to 403Bs and 457s. Were Minnesota teachers forced into defined contribution plans, they would be cast from the public lifeboats. Meanwhile, those remaining in the defined contribution plan would represent a very, very large financial liability for taxpayers 20 or 30 years on.
Now, while the markets are doing well, is the time to do something to help shore up our present, healthy system. With a legislature and pension commission more likely to listen, we need to send them a simple message: Find creative ways to assure the health of the plan. Don’t abandon a proven lifesaver. Get ahead of the next big storm.
This message is especially important for active members to understand and support. You actives, especially younger ones, are being encouraged to go it on your own, appealing to your sense of individualism. You are being discouraged from trusting public support networks, treating communal action as somehow wrong. As active teachers, you are particularly susceptible to this politicized negativism; you are underpaid, over-worked, under evaluation threat, and prone to seeing retirement as just a vague idea when compared to heavy school loans and rent or mortgage payments that are all too clear and real.
Before I left MPS, I worked with some new teachers. I mentored or teamed with them, and they are still important to me. They and you need to know what my pension means for me, and what I had to do to get where I am. I’m not rolling in money, but my wife and I will probably get by okay. I hope to get into more buildings this year to tell you my story, because communicating is how we can work together for our common interests. Changing from our current, outstanding defined benefit pension system to a risky, costly individual defined contribution plan, even in a hybrid form, spells the eventual end to the investment fund that pays the bulk of pensions now leaves you at the whim of the market or annuities that may be depleted before you are.
Some teachers today, may see pension contributions as a tax. Well, if taxes are the price we pay for a civilized society, then TRA contributions are the price you pay for a civilized retirement.