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Who’s Doing the Math? Response to letter dated 10/20/11 from: Anthony W. Freeman titled “Retire offensive teacher pension arguments,” http://www.ocregister.com/articles/-142947-ocprint--.html First the numbers: a $70,000.00 annual salary for a teacher with thirty years of service working a 10 month year. The pension is calculated at the highest monthly salary. $70,000 / 12 months = $5,833.33 times 30 years of service at 2% for each year of service = 60% comes to $3,500 per month * 12 months or $42,000 per year that the employee receives plus a like amount given to his fund. This will total $84,000 as his yearly pension. In this example it is not known when salary step increases occurred. The following will use the final monthly salary to compute the employee contributions plus interest earned. At $70,000 with an 8% contribution the amount is $5,600 per year times 30 years of service is the total amount $168,000 / $42,000 he will receive each year. In the first 2 years into the retirement his investment will be recovered less whatever interest (estimated 6%) he might have earned. The pension fund pays out the contributions from the pensioner first. This means no taxpayer funds are included until these funds are exhausted. Let’s also assume that he was hired at age 25 and retired 30 years later he starts receiving his pension. Twenty years pass and he dies in an automobile accident. He would have received a total $2,352,000. None of these numbers include the interest earned or pension COLA increases. This is the amount taxpayers pay on this legal pyramid rip-off. Joe R. Chavez |
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