Hacker News Reader

Comment by qmalzp | Hacker News Reader

It does seem reasonable that there would be a cap, but I wonder how much cutting the pensions of a few thousand highly paid retirees will impact the budget.

View on HN

If we assume that the average pension of those with a pension over $100,000/year is $200,000 a year, and cut those down to a cap of $100,000/year it would be $200,000,000/year in pension reduction. With a $2.5 billion/year spend on PERS [0], that is not an insignificant amount on the entire burden of the pension system, even if it is off by an order of magnitude.

[0] http://www.pers.ms.gov/Content/Supplemental/persfacts_figure...

If you assume the average for those over $100k is $17 billion, capping it at $100k would save the entire budget many times over!

$200k is a completely arbitrary assumption. And if your cost savings are off by an order of magnitude, it is basically insignificant, at <1% of the budget.

If you can wave a wand and reduce benefits, targeting only the top 2000 is probably not the most effective use of your magic.

There is another key point to fixing the absurd top N% of pensions that are receiving large payouts: maybe it won't save the budget, however those funds can go toward paying for more pensions (eg in the bottom 50%) with the same capital outlay. The $100,000 you shave off a spiked pension at the top, might pay for four lower level pensions. In these types of scenarios, 5% and 10% optimizations are a big deal over the long-haul.

At the very least, someone should crunch the numbers and find out. It's anyone's guess how the ratios will skew until you measure them.

How to approach this fairly is a whole other can of worms; there will almost inevitably be some unjust outcomes.

The data is here: https://gov.oregonlive.com/pers/ (you can download a CSV).

There are 2,032 people making over $100,000 per year. The sum of their pensions is $252,144,041.04 per year. If each were capped at $100,000 per year that would be $203,200,000 per year, so a potential savings of $48,944,041.04

Reply on news.ycombinator.com