The state pension system – for those who don’t know how it works.
Keep the figures simple $100,000 per year salary – this is VERY rare as the vast majority make far less than that. It is a contributory pension 6% minimum by the employee. Matched by the state.
So every year that persons retirement fund has $12,000 contributed towards it after 35 years you have $420,000 in that account – but that does not take into account investment growth – which for historical purposes has been very good.
Over 30 years that account could be worth well over $1 Million – total between employee contribution, employer contribution and investment growth.
OK he retires. He gets 66% of his salary or $66,000 per year. He’s got 15 years worth of income but his account STILL grows as investments show growth. Lets assume he’s got 20 years worth of income and he lives to be 90. He drains his account and all is fine and dandy.
But what happens if he dies the day after he retires? (I know someone who did just this, sadly). Using the example above - He contributed $210,000 his widow gets a portion of that. The states portion $210,000 and the investment growth portion, $520,000 stay in the system and continue to grow to fund those who maybe retire early or live longer than expected. This covers administration costs as well. With a system as large as North Carolina’s you can be assured they make a LOT of money on investments, even conservative ones like Treasury bonds. Heck, most municipal bonds (Muni’s) pay 7 or 8% or higher – and the NC retirement system can move the stock and bond market all by itself.
The system can be gamed but those instances are few and far between considering how big the system is and how many people it covers. So when I hear a comment like “The taxpayers are funding his $71,000 retirement” I have to laugh. Yes we are funding it – as is Easely but the implication is it’s all coming out of our pockets.
Of course if you want to believe that - then think about how McCrory now can nominate 1,000 people to state positions (many that pay BIG Wages) and how much THAT will cost us. It’s 2X as many as ANY other Governor has had the ability to appoint – in history.
Tom - I’m registered as non-affiliated for JUST this reason. I can criticize Dem/GOP politicians alike because I basically don’t trust either party and McCrory’s penchant for giving out BIG pay raises and his ability to appoint 1000 people to plum government jobs (I hope he doesn’t use all 1,000) could make his term(s) as Governor the most costly in state history as far as the Pension plan goes.
I hope he proves me wrong
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