The New York Times wrote an excellent piece this weekend on some of the problems facing public school 403(b) retirement plans. I was quoted twice and have provided background and analysis in the development of the story. You can read it at the following link:
Some readers have responded in the most idiotic manners and I feel like I need to respond, so I'll highlight a few and respond, this is the first.
Michael Callahan of Ocean City, NJ on October 22, 2016 commented:
"I am supposed to feel bad for people who get pensions for which they personally do not pay in ONE DIME? Who get summers off, and week breaks every winter and spring? Who get Tiffany health plans, again which they hardly contribute to? Try living in the real world, folks Then get back to me with your insufferable whining."
If one business pays an employe $5,000 a month with no benefits and another business pays their employees $3,000 per month plus $1,000 toward their healthcare and $1,000 toward their retirement is one business paying more than the other for their employee? Are the employees of the latter company not paying anything toward their healthcare or retirement? Setting aside the issue of taxation for the moment, the answer is no and yes.
The idea that benefits are not part of compensation is an absurd notion and ignores basic math, yet, this commenter seems to think that because an employer pays directly a portion of healthcare or retirement that the employee is somehow getting something for free, they are not, they've simply agreed to receive their compensation in a different form.
Of course the statements is mostly false anyway. My wife is a teacher and each paycheck has a deduction $684.15 for health and dental insurance. The employer pays an additional $773 per paycheck. If the employer did not provide health insurance they'd be able to pay an additional $773 to my wife (of which she'd use to buy health insurance).
Stating that teachers "do not pay in one dime" to their pensions or health care is just pure ignorance. My wife currently pays 10.25% of her paycheck into her defined benefit plan and the school district contributes almost 13% (rising to 20% in 2020). If the school district didn't have to pay the 13% to my wife's retirement DB plan, that money would be available to pay her an increased salary. That's how it works, it's not as if teachers who forgo a pension would also continue to receive lower pay.
As for the whole "they get summers off...and breaks"...again, pure ignorance. This person has no clue how much work many teachers do on their breaks, during their summers and after hours (like grading papers, creating curriculum, doing continuing education on their own dime, etc.). In addition, this idiot also doesn't understand the stresses that come with teaching and that by taking breaks they come back more refreshed and better able to do their jobs. When teachers are less stressed they are better at what they do - that is, they are better at teaching our nation's youth. Finally, why wouldn't we want to pay our nation's instructors a professional wage, isn't their job one of the most important?
Maligning a group of people who on average are paid less is a petty and uniformed position that deserves to be mocked.
According to Michael Callahan, our teachers deserve to have poor 403(b) plans. I beg to differ, they work to hard and have to tough a job to also be subjected to retirement programs designed to loot their retirement. The only insufferable whiner here is Mr. Callahan, shame on him.
Our public school employees deserve better and I applaud the Times for exposing this racket.
Scott Dauenhauer, CFP, MPAS, AIF
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