I've joked repeatedly in recent years that someone should have told me about government pensions when I in college or starting my career. My peers who went into teaching or law enforcement or other government service are already retired on comfortable government pensions while I continue to toil in the working world, hoping to build up enough reserves — or reduce the number of years of retirement — to make ends meet during retirement.
Government jobs are some of the few that still offer a defined-benefit pension program — one in which the retiree receives a specified amount in monthly installments from day or retirement until day of death (or spouse's death, whichever comes later). As this article in today's News & Observer shows, government salaries and government pensions are far exceeding what most people in private business or industry can attain.
The newspaper focuses on the pension for a school superintendent, whose annual salary peaked at around $250,000 and whose annual pension, according to the article, will be around $145,000. State law has been altered to create an exception to a federal law aimed at limiting the size of pensions, and it appears that county government will have to make a lump-sum payment to support the superintendent's pension, which amounts to roughly the cost of three teachers' annual salaries.
And, by the way, the superintendent will retire at age 50!
A local government employee several years announced that he was retiring because he had just discovered that he could make more money as a retiree than he could working full-time in his high-level job.
Let's consider just the salary of this superintendent. Salaries of upper-level governmental employees have been rising steadily, although salaries of the rank-and-file have not. Although a $250,000 school superintendent pales in comparison to a $3 million bank executive, a six-figure salary with a pension is still an attractive inducement.
A friend of mine likes to get incensed at school principal salaries, which can top $100,000 in North Carolina. That salary, he points out, is roughly equivalent to a Navy captain's pay — the pay of an aircraft carrier's skipper. That carrier's captain has about 5,000 people under his command, and he is responsible for a multi-billion warship armed with conventional and nuclear weapons that can sink other warships, shoot down aircraft and obliterate cities. The school principal, as hard-working as he/she may be, does not have that kind of responsibility or that kind of authority.
Consultants' salary studies purchased by local governments to justify pay raises for their top dogs may not be making the right comparisons.