Soflasnapper

07-07-2011, 04:36 PM

I've had an idea for some time now that could save governmental bodies a lot of money over time.

Cap all public pension cpi increases at the maximum such increase available at a max SS payment's equivalent.

I think it's true that a top SS monthly payment is maybe $2200. If the cpi came in at 2% a given year, that would be a $44 increase a month (= $528 a year). Make this figure the maximum COLA increase that ANYONE receiving a public pension can receive.

Say, for example, some pension (or combination of pensions) is $80,000 annually. That 2% increase on that amount is $1,600 a year, (= $133.33 a month). Capped at a $528 increase for the year instead saves $1,072 a year (less savings proportionally for a lesser pension amount).

Once this is done, there is a terrific accumulative effect. In year two, using the example's numbers, same 2% cpi and same caps, now whichever governmental body is paying the pension saves $2,144 in THAT year alone compared to now, totaling a savings to the taxpayers funding that governmental body of $3,216 over just two years. And so forth.

If we simplify by rounding down the first year savings $1,000, then over a 10-year period, you save in each equivalent year out approx. 1+2+3+4+5+6+7+8+9+10 thousands, = $55,000. If there were 1 million pensions that large, that is a savings of $55 billion over 10 years. $80k is by no means the largest pension out there (see California and its Calpers program figures. There are 6-figure pensions, and up to mid-6 figure pensions ($500k and more).

There's no doubt that curbing and capping cpi increases to the SS max cpi increase would erode the purchasing power of the pension. Yes, it would.

But pay attention to what alternative treatment of pensions under SS reform is being suggested now. The suggestion is that the SS increases themselves be trimmed, by using a different, lower formula related to gdp, not cpi. THAT would erode the minimal SS pension below its current stingy level of benefits and increases, on the backs of some of the most needy.

Cap all public pension cpi increases at the maximum such increase available at a max SS payment's equivalent.

I think it's true that a top SS monthly payment is maybe $2200. If the cpi came in at 2% a given year, that would be a $44 increase a month (= $528 a year). Make this figure the maximum COLA increase that ANYONE receiving a public pension can receive.

Say, for example, some pension (or combination of pensions) is $80,000 annually. That 2% increase on that amount is $1,600 a year, (= $133.33 a month). Capped at a $528 increase for the year instead saves $1,072 a year (less savings proportionally for a lesser pension amount).

Once this is done, there is a terrific accumulative effect. In year two, using the example's numbers, same 2% cpi and same caps, now whichever governmental body is paying the pension saves $2,144 in THAT year alone compared to now, totaling a savings to the taxpayers funding that governmental body of $3,216 over just two years. And so forth.

If we simplify by rounding down the first year savings $1,000, then over a 10-year period, you save in each equivalent year out approx. 1+2+3+4+5+6+7+8+9+10 thousands, = $55,000. If there were 1 million pensions that large, that is a savings of $55 billion over 10 years. $80k is by no means the largest pension out there (see California and its Calpers program figures. There are 6-figure pensions, and up to mid-6 figure pensions ($500k and more).

There's no doubt that curbing and capping cpi increases to the SS max cpi increase would erode the purchasing power of the pension. Yes, it would.

But pay attention to what alternative treatment of pensions under SS reform is being suggested now. The suggestion is that the SS increases themselves be trimmed, by using a different, lower formula related to gdp, not cpi. THAT would erode the minimal SS pension below its current stingy level of benefits and increases, on the backs of some of the most needy.