How do pension payments work?
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TMX Group is in the midst of an intense takeover battle that recently saw one of it suitors, the London Stock Exchange Group, drop out of the competition after the deal failed to gain enough shareholder support.
The remaining bidder, Maple Group Acquisition Corp., a group of financial institutions and pension funds said Wednesday it will give investors more time to decide whether they want to tender their shares under the $3.8-billion offer.
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Maple has said previously that it expected to receive approvals in the fall.
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The TMX has said it will continue its expansion plan, whether it comes to an agreement with Maple, or moves forward on its own.
Also on Wednesday, TMX Group announced the purchase of Atrium Network, a provider of capital markets data in Europe and North America.
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For more infomation about Pensions pop by the authurs blog
What do you do when you are forced to retire without any retirement savings in hand? You manage your income and expenses and plan for the future. I had to come up with this plan when my father, who had been working all of his life, became unable to work and started collecting on his pension. With a sudden influx of more cash than he was making while working, and knowing his history of not always spending his money on the 'right' things, I wanted to develop a set-it-and-forget-it type of plan that could help him stay out of debt in his retirement years.
Gather all Sources of Income
For someone like my father, who was not receiving any income but his pension and social security, it was important to know just how much he would be collecting each month. Another important piece of information to know is when the payments would be sent. For someone on a limited source of income, working with creditors and vendors to schedule due dates after income is received is helpful in making sure that all bills will be paid. While pension payments can seem similar to distributions from a 401k account, the fact is that if he were to need more money one month, he doesn't have his own money sitting in an account, ready to be drawn upon as needed. He gets what he gets.
Determine All Expenses and Debt
Next up was to figure out how much money he would be spending each and every month. This included looking at all of his income checks to see if the issuers were taking out any income tax, or if he would end up making payments at the end of the year. We discovered that they were not providing that service, so instantly we added 15% of every check to the debt list. Other items on the list included monthly and yearly expenses, such as all insurance premiums, monthly medical and prescription expenses, food, housing, gas, emergency fund savings, and entertainment. We also looked at due dates to see if anything needed to be adjusted. Most companies will be willing to change your billing cycle dates if you simply call and ask.
Create Your Budget
Once all income is determined and all expenses are determined, it is time to set up the budget. Really look at how much everything is costing you, and if there is any money left over at the end. If you don't own your home, consider moving from a traditional apartment to a sliding scale retirement complex to free up some cash. I am a firm believer that if all money is spent on only debt and expenses, with no money left over for 'fun' and spur-of-the moment enjoyment, then life can start to seem pretty cumbersome and miserable. No one wants to feel swallowed by debt.
A key factor in the creation of the budget is the 'emergency fund.' For someone in retirement age with no savings, adding money to this fund is vital. Surprise medical expenses will happen, and they are large enough to cause huge financial strain, and are a leading cause of declaring bankruptcy. I recommend that 10% automatically be put aside in this fund. Don't fudge it either - living a little more frugal with savings in the bank is going to be the best thing you ever did for yourself.
Set Up the Bank Accounts
At the start of this process, my dad had a traditional brick-and-mortar savings account, checking account, and credit card. We went to the online world of banking to set up the following accounts: an online checking account at ING Direct (we declined the debit card), an online savings account at ING Direct, and an online savings account at Smartypig.com.
All of the income checks are deposited into my dad's traditional checking account. For someone who has difficulty controlling his spending when he has money in his checking and savings accounts (easily accessible via ATM machines), it was crucial that we remove all of the money allotted to debt, expenses, and future savings (emergency fund) from that account. Only leftover discretionary funds are to remain in his traditional checking and savings accounts.
If you remember from my previous article, Smartypig.com savings accounts are set up almost like an umbrella account - it is one savings account that is broken up into multiple 'goals'. For every long term/yearly expense, we created a goal. Each goal can be set up to automatically withdraw a specific dollar amount from the traditional checking account on any day that we chose. Examples of goals we set up are car insurance premiums, income tax payments, vacations, and that all important emergency fund! One thing to note with the Smartypig goals is that to get the money, you need to actually close a goal. This will deactivate the auto-transfer payments, but since the goals were set up for yearly expenses, creating a new 'goal' once per year is not that difficult, and it allows us to adjust if we over-estimated any of the expenses.
All other monthly expenses and debt repayments were set up on auto bill-pay out of his ING Direct Online Checking account. The total of these expenses are auto-transferred out of his traditional checking account into the ING checking. We also chose to take the money my dad had been putting into his traditional savings account and start putting that money into his ING online savings account. We actually took 3% of the 10% emergency fund savings and allotted it to this savings account, leaving 7% to go to the Smartypig account. Since both of the ING Direct accounts are directly linked to his checking account, should he need to, the money can be easily transferred back to his traditional checking and savings, without having to close any goals.
While the initial work put in to setting up the accounts can be a little tedious, the plan is saving my dad time and money every month. His bills are being paid, and he is setting himself up with a nice cushion of savings, should he need it. With a little time and planning, anyone can manage their retirement using online banks.
How do pension payments work?
[blogsearch(Pension Release
"Increase your current pay substantially by receiving two checks!"
"Average savings per... employee is approximately 30%."
These claims, made on an "employee lease-back" company's website, are attractive for both retiring classified and certified school staff as well as school districts concerned about tight budgets and filling critical teaching slots with "highly qualified" personnel (Educational Services, Inc., 2010). In Arizona, companies such as Educational Services, Inc. have taken advantage of particular statutes (ARS §38-766.01) that stipulates that a member of the Arizona State Retirement System (ASRS) can, after normal retirement, "return to, or continue to work, any amount of time AND continue to receive pension benefits after being retired for 12 months" (Arizona State Retirement System, 2006; capitalization added for emphasis).
Programs that allow public sector employees to retire and the be rehired back into their former positions or departments within the state or local system, often called "return-to-work" statutes, are pervasive in various forms throughout the country. Predominantly due to teacher shortages and problems with teacher retention in critical curricular areas like math and science, a substantial number of states began to allow retired staff to return to work full-time and enable them to earn a percentage of their former salary while collecting pension benefits. Since public school teachers generally fall under a state's employee guidelines, fair practice involved most, if not all, state employees having eligibility for this retire-rehire practice. Arizona is among the states whose retirement laws allow this practice; ignominiously called "double-dipping."
There are strict rules governing the return to work process at both the state and federal levels. In Arizona, the process is regulated through the Arizona Revised Statutes (A.R.S.), the Arizona Administrative Code, and the federal codes for the Internals Revenue Service (IRS), and Section 218 of the Social Security Act (Arizona State Retirement System, 2010). Arizona state retirees who wish to return to work immediately can only work part time without jeopardizing their pension check. As stated previously, an ASRS member can return to work, even full-time work, after "normal retirement" and a break in service of 12 months. The idea of sitting out of work for a period of a year did not help with teacher shortages in schools or savings to districts if they needed to hire a replacement for a retired teacher and then deal with placing that newly hired teacher the next year when the retiree returned.
The solution to this dilemma lay in the forming of lease back companies such as Educational Service, Inc. and smartschoolplus. These companies act as contracting agents with school districts. The retired members of ASRS become employees of one of these types of companies, from which a participating school district then leases, or contracts for, the services of the companies' employees. This is allowable under A.R.S. § 38-711. These retirees fulfill the 12-month break-in-service requirement by being contract employees not directly employed by their districts. They do not jeopardize their pension income and can receive all or a portion of their original salary. Districts, on average, pay these retire-rehires about 80% of their exit salary, which after other deductions paid by the employee, ends up as a net gain of about 70% of their original salary. Added on the their pension payments which are generally around 70% of a ASRS member's exit salary gives the member a substantial increase in take home pay.
Since school districts do not need to pay a leaseback employee their full salary, health benefits, or match funds into the ASRS fund, there can be substantial savings for the district. Districts do need to pay the lease back company an administrative fee for the contracting services, which is generally a percentage of the employees gross wages. It appears to be a win-win situation for the employees and the school district that hires them. However, there are drawbacks to this program in the realm of public perception, concerns with the financial stability and sustainability of the ASRS, as well as possible abuses of the legislative intent of the statutes.
The ASRS has several mechanisms to forestall a large wave of retiring employees at any one time such as having a statutory normal retirement age of 65, 62 with 10 years of service, or 80 points (consisting of years of service plus chronological age). Employees may return to work part-time immediately after retiring, but pension payments are suspended if the employee goes over the regulated number of weeks or hours. Employees may return to work full-time after a break in service of 12 months. Therefore, teachers, classified staff, and administrators cannot retire at the end of one school year and return full-time the next year. Nonetheless, the previously mentioned lease back companies such as smartschoolsplus and Educational Services, Inc. provide the means for employees to return immediately to work as a contracted employee. While the companies rightly claim that this allows district to hire back highly qualified employees at a reduced cost, what is not revealed is that new, inexperienced teachers could be hired for even less. These new teachers start their careers as highly qualified teachers coming form teacher colleges and prep programs, according to state and federal regulations. New teachers can be hired at even lower salaries because the starting pay in most districts is even lower than 80% of a 20-year-veteran teacher's salary. Granted, the dip in effectiveness is widely established, but new teachers are continually needed in school systems and that dip must be absorbed at some point regardless of how many return-to-work teachers are on the payroll. In addition, these new teachers would be paying into the ASRS fund while the return-to-work teachers and their districts pay nothing into the system.
Therefore, the positions of these teachers, along with classified staff and administrators taking advantage of the retire-rehire policy, are actually diminishing the potential revenues going into the ASRS fund. The fund is currently considered stable and able to handle the relatively limited use of the retire-rehire arrangement. If a larger portion of Arizona state employees start to use the return-to-work program and occupy potential ASRS revenue positions it could begin to erode the fund's stability as well as trigger increases to the contribution rate for non-retired employees and their districts; an unintended consequence of the windfall salary-pension/school budget-friendly arrangement allowed by the return-to-work policy.
Some unease over the developing culture of "double-dipping" has arisen both with some school boards and with the Arizona public. For instance in 2008, Scottsdale's school board voted its approval for a plan for its employees to participate in retire-rehire program through smartschoolsplus; however, the vote was 3-2 with the dissenters voicing concerns about "encouraging a culture of 'double-dipping' by letting employees receive both a salary and a pension" (East Valley Tribune, 2008 March 19). A member of the Queen Creek Unified School District's board had a similar sentiment and cast a dissenting vote when that entity decided the same issue (Ringle, 2008 April 29). Letters to the editor in several Arizona papers expressed similar distress over the issue they termed "double-dipping" by public employees, though their concerns extended beyond just educators into public safety and other public sector departments that use the ASRS (Bowser, 2009).
Related to concerns by school board members and the public is the uneasiness surrounding the developing frequency of state employees collecting a pension while returning to work for the same agency or organization. Some feel that this practice skirts ethics surrounding the legislative intent of the enacted statutes regarding return-to-work when it extends beyond situations that involve shortages of qualified personnel in specialized positions such as teaching math and science, school psychologists, etc. State Representative Henry Mock of New Hampshire asserts, "Retirement systems were meant for retirement, not for retainment of personnel. If they have teacher shortages and more money will keep them, give them more money - don't do it under the disguise of retirement" (Sostek, 2003, p. 45).
Enacting safeguards such as: 1.) placing caps on the amount of years a return-to-work employee may work, 2.) mandating school district requirements for proving a skilled employee shortage prior to allowing a rehire of a retired employee, 3.) imposing an excise tax on payouts to help replace lost revenue from non-contributing positions, 4.) reducing pension benefits while receiving outside income then receiving a bonus payment later by increasing the annuity, can help avert fiscal crisis and threats to a resource that significant numbers of Arizonans depend upon (Miller, 2009; Sostek, 2003).
School districts might save substantial money and be able to retain highly qualified personnel in difficult to fill positions. School employees can collect and earn significantly more money for several years at the ends of heir careers, which can be seen as an inducement to stay in service in high need areas. However, an increasing sense of entitlement by public sector employees to be able to retire and return-to-work with full pension benefits can lead to detrimental and unintended effects on the Arizona State Retirement System (ASRS) by eroding the revenue stream of contributions to an unstable limit and turning public sentiment against education systems that allow this to become common practice. By enacting some protective restrictions that limit unnecessary utilization of ASRS funds, legislators and other policy makers can help instill a sense of good stewardship and preserve a crucial resource for large numbers of Arizona citizens well into the future.
Resources
Arizona State Retirement System. (2006 July). Fact sheet: returning to work after retirement. Retrieved from https://www.azasrs.gov/web/FactSheets.do
Arizona State Retirement System. (2010). ASRS guidelines: working after retirement. Retrieved from https://www.azasrs.gov/content/pdf/fact_sheets/Working_After_Retirement.pdf
Bowser, B. (2009, December 16). No Double-Dipping Amid Teacher Layoffs. [Letter to the editor]. Arizona Daily Sun, Flagstaff Section. Retrieved from http://azdailysun.com/
Educational Services, Inc. (2010). Employee cost comparison. Retrieved from http://www.educationalservicesinc.com/employee-leasing/employee-cost-comparison
Miller, G. (2009, December 17). Looking twice at pension double-dipping: should full pensions be allowed if you keep working. Governing. Retrieved from http://www.governing.com/columns/public-money/Looking-Twice-at-Pension.html
Ringle, H. (2008, April 29). Retired teachers getting back in the act: Queen Creek approves cost-saving deal to bring in experienced educators. The East Valley Tribune. Retrieved from http://www.eastvalleytribune.com
smartschoolsplus. (2010). Phased Retirement. Retrieved from http://www.smartschoolsplus.com/index.html
Sostek, A. (2003, July). Double-dip dilemma. Governing. 16(10), 44-45.
Las pensiones]
For more infomation about Pensions pop by the authurs blog
"Increase your current pay substantially by receiving two checks!"
"Average savings per... employee is approximately 30%."
These claims, made on an "employee lease-back" company's website, are attractive for both retiring classified and certified school staff as well as school districts concerned about tight budgets and filling critical teaching slots with "highly qualified" personnel (Educational Services, Inc., 2010). In Arizona, companies such as Educational Services, Inc. have taken advantage of particular statutes (ARS §38-766.01) that stipulates that a member of the Arizona State Retirement System (ASRS) can, after normal retirement, "return to, or continue to work, any amount of time AND continue to receive pension benefits after being retired for 12 months" (Arizona State Retirement System, 2006; capitalization added for emphasis).
Programs that allow public sector employees to retire and the be rehired back into their former positions or departments within the state or local system, often called "return-to-work" statutes, are pervasive in various forms throughout the country. Predominantly due to teacher shortages and problems with teacher retention in critical curricular areas like math and science, a substantial number of states began to allow retired staff to return to work full-time and enable them to earn a percentage of their former salary while collecting pension benefits. Since public school teachers generally fall under a state's employee guidelines, fair practice involved most, if not all, state employees having eligibility for this retire-rehire practice. Arizona is among the states whose retirement laws allow this practice; ignominiously called "double-dipping."
There are strict rules governing the return to work process at both the state and federal levels. In Arizona, the process is regulated through the Arizona Revised Statutes (A.R.S.), the Arizona Administrative Code, and the federal codes for the Internals Revenue Service (IRS), and Section 218 of the Social Security Act (Arizona State Retirement System, 2010). Arizona state retirees who wish to return to work immediately can only work part time without jeopardizing their pension check. As stated previously, an ASRS member can return to work, even full-time work, after "normal retirement" and a break in service of 12 months. The idea of sitting out of work for a period of a year did not help with teacher shortages in schools or savings to districts if they needed to hire a replacement for a retired teacher and then deal with placing that newly hired teacher the next year when the retiree returned.
The solution to this dilemma lay in the forming of lease back companies such as Educational Service, Inc. and smartschoolplus. These companies act as contracting agents with school districts. The retired members of ASRS become employees of one of these types of companies, from which a participating school district then leases, or contracts for, the services of the companies' employees. This is allowable under A.R.S. § 38-711. These retirees fulfill the 12-month break-in-service requirement by being contract employees not directly employed by their districts. They do not jeopardize their pension income and can receive all or a portion of their original salary. Districts, on average, pay these retire-rehires about 80% of their exit salary, which after other deductions paid by the employee, ends up as a net gain of about 70% of their original salary. Added on the their pension payments which are generally around 70% of a ASRS member's exit salary gives the member a substantial increase in take home pay.
Since school districts do not need to pay a leaseback employee their full salary, health benefits, or match funds into the ASRS fund, there can be substantial savings for the district. Districts do need to pay the lease back company an administrative fee for the contracting services, which is generally a percentage of the employees gross wages. It appears to be a win-win situation for the employees and the school district that hires them. However, there are drawbacks to this program in the realm of public perception, concerns with the financial stability and sustainability of the ASRS, as well as possible abuses of the legislative intent of the statutes.
The ASRS has several mechanisms to forestall a large wave of retiring employees at any one time such as having a statutory normal retirement age of 65, 62 with 10 years of service, or 80 points (consisting of years of service plus chronological age). Employees may return to work part-time immediately after retiring, but pension payments are suspended if the employee goes over the regulated number of weeks or hours. Employees may return to work full-time after a break in service of 12 months. Therefore, teachers, classified staff, and administrators cannot retire at the end of one school year and return full-time the next year. Nonetheless, the previously mentioned lease back companies such as smartschoolsplus and Educational Services, Inc. provide the means for employees to return immediately to work as a contracted employee. While the companies rightly claim that this allows district to hire back highly qualified employees at a reduced cost, what is not revealed is that new, inexperienced teachers could be hired for even less. These new teachers start their careers as highly qualified teachers coming form teacher colleges and prep programs, according to state and federal regulations. New teachers can be hired at even lower salaries because the starting pay in most districts is even lower than 80% of a 20-year-veteran teacher's salary. Granted, the dip in effectiveness is widely established, but new teachers are continually needed in school systems and that dip must be absorbed at some point regardless of how many return-to-work teachers are on the payroll. In addition, these new teachers would be paying into the ASRS fund while the return-to-work teachers and their districts pay nothing into the system.
Therefore, the positions of these teachers, along with classified staff and administrators taking advantage of the retire-rehire policy, are actually diminishing the potential revenues going into the ASRS fund. The fund is currently considered stable and able to handle the relatively limited use of the retire-rehire arrangement. If a larger portion of Arizona state employees start to use the return-to-work program and occupy potential ASRS revenue positions it could begin to erode the fund's stability as well as trigger increases to the contribution rate for non-retired employees and their districts; an unintended consequence of the windfall salary-pension/school budget-friendly arrangement allowed by the return-to-work policy.
Some unease over the developing culture of "double-dipping" has arisen both with some school boards and with the Arizona public. For instance in 2008, Scottsdale's school board voted its approval for a plan for its employees to participate in retire-rehire program through smartschoolsplus; however, the vote was 3-2 with the dissenters voicing concerns about "encouraging a culture of 'double-dipping' by letting employees receive both a salary and a pension" (East Valley Tribune, 2008 March 19). A member of the Queen Creek Unified School District's board had a similar sentiment and cast a dissenting vote when that entity decided the same issue (Ringle, 2008 April 29). Letters to the editor in several Arizona papers expressed similar distress over the issue they termed "double-dipping" by public employees, though their concerns extended beyond just educators into public safety and other public sector departments that use the ASRS (Bowser, 2009).
Related to concerns by school board members and the public is the uneasiness surrounding the developing frequency of state employees collecting a pension while returning to work for the same agency or organization. Some feel that this practice skirts ethics surrounding the legislative intent of the enacted statutes regarding return-to-work when it extends beyond situations that involve shortages of qualified personnel in specialized positions such as teaching math and science, school psychologists, etc. State Representative Henry Mock of New Hampshire asserts, "Retirement systems were meant for retirement, not for retainment of personnel. If they have teacher shortages and more money will keep them, give them more money - don't do it under the disguise of retirement" (Sostek, 2003, p. 45).
Enacting safeguards such as: 1.) placing caps on the amount of years a return-to-work employee may work, 2.) mandating school district requirements for proving a skilled employee shortage prior to allowing a rehire of a retired employee, 3.) imposing an excise tax on payouts to help replace lost revenue from non-contributing positions, 4.) reducing pension benefits while receiving outside income then receiving a bonus payment later by increasing the annuity, can help avert fiscal crisis and threats to a resource that significant numbers of Arizonans depend upon (Miller, 2009; Sostek, 2003).
School districts might save substantial money and be able to retain highly qualified personnel in difficult to fill positions. School employees can collect and earn significantly more money for several years at the ends of heir careers, which can be seen as an inducement to stay in service in high need areas. However, an increasing sense of entitlement by public sector employees to be able to retire and return-to-work with full pension benefits can lead to detrimental and unintended effects on the Arizona State Retirement System (ASRS) by eroding the revenue stream of contributions to an unstable limit and turning public sentiment against education systems that allow this to become common practice. By enacting some protective restrictions that limit unnecessary utilization of ASRS funds, legislators and other policy makers can help instill a sense of good stewardship and preserve a crucial resource for large numbers of Arizona citizens well into the future.
Resources
Arizona State Retirement System. (2006 July). Fact sheet: returning to work after retirement. Retrieved from https://www.azasrs.gov/web/FactSheets.do
Arizona State Retirement System. (2010). ASRS guidelines: working after retirement. Retrieved from https://www.azasrs.gov/content/pdf/fact_sheets/Working_After_Retirement.pdf
Bowser, B. (2009, December 16). No Double-Dipping Amid Teacher Layoffs. [Letter to the editor]. Arizona Daily Sun, Flagstaff Section. Retrieved from http://azdailysun.com/
Educational Services, Inc. (2010). Employee cost comparison. Retrieved from http://www.educationalservicesinc.com/employee-leasing/employee-cost-comparison
Miller, G. (2009, December 17). Looking twice at pension double-dipping: should full pensions be allowed if you keep working. Governing. Retrieved from http://www.governing.com/columns/public-money/Looking-Twice-at-Pension.html
Ringle, H. (2008, April 29). Retired teachers getting back in the act: Queen Creek approves cost-saving deal to bring in experienced educators. The East Valley Tribune. Retrieved from http://www.eastvalleytribune.com
smartschoolsplus. (2010). Phased Retirement. Retrieved from http://www.smartschoolsplus.com/index.html
Sostek, A. (2003, July). Double-dip dilemma. Governing. 16(10), 44-45.