Quote:
Originally Posted by GGG
The government match is about 9%. What teachers are forced to put in is not material to a wage discussion because it comes out of their wages but it’s somewhere around 10.
My point is that if a private company is giving 5% match the difference between a private sector plan and a teachers gold plated plan we complain about is a 4% difference in wages. It’s minuscule, what keeps people from retiring like teachers is they don’t save the same % of total income.
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Well, sure, but that isn't entirely true. Part of the deal with the full DB pension is that the risk falls to the employer instead of the employee. If you have a DC pension plan with matching, the employer is effectively saying, "Here's your money. You figure out how to make that into a lifetime income, as we've done our part."
The DB pension, though, says, "You contribute, we contribute, and at the end of it, here is the lifetime income for you, no matter what happens in the markets or with the underlying investments."
You sound like you're assuming that people can save more and make that work. I don't entirely disagree. However, as people age and get closer to their retirement, and rely on that guaranteed income, they quickly see that the DC plan is not the same! Throw in some things like that benefits plan that also carries you through retirement or never having to concern yourself with a market downturn, and you have a lot of factors that make that DB plan very attractive.