Archive for March, 2011
What Sort of Pensions Does the Private Sector Have in Memphis?
There is a national debate going on between public sector/private sector benefits and pensions. But what about firms in Memphis and Shelby County?
Several months ago I undertook a private survey of local firms concerning pensions and benefits. How did I do it? Well it is not easy. However I had help from some local people and I was able to gather information about pensions, benefits (paid time off such as vacations, sick days, holidays etc.) and health care. Over the next two weeks I will publish this information so that you can compare public employees (Memphis, Shelby County and MLGW) with private sector employees. (Salaries are another question and I firmly believe that when benefits and pensions are equal, then salaries should reflect the skills and education to do the public or private job).
First let us look at pensions. The biggest thing that struck me was that the two engines of local commerce (FedEx and Smith and Nephew) gave up their defined benefit pensions in 2003. They froze the plans and went to a defined contribution plan. They realized that defined benefits pensions were unsustainable. Most, if not all local firms, have social security and a 401K to which some contribute a percentage match of whatever the employee puts in. Therefore the employee when he retires at social security age retires on what he saved personally and what he has in his 401K and social security. Compare that with what is offered to local public sector employees. Here is what I found.
Public servants versus Private local companies comparing pensions
City of Memphis defined benefit plan 72.5% of highest 3 year average salary for Fire and Police. General employees, last 12 months salary. (This 12 month rule has led to abuse)
Shelby County defined benefit plan 82.5% of highest 3 year average salary
MLGW defined benefit plan 85% of highest 3 year average salary
Memphis, Shelby County and MLGW have 457 plans for employees but they do not contribute to the plan. For the defined benefit plans above, employees contribute from 0% to 8% depending on the plan.
FederalExpress They have capped their defined benefit plan as of May 31, 2008 and discontinued it for new employees as of May 31, 2003. New employees after that date have a defined contribution plan. Effective January 1, 2008, FedEx has a 401(k) company matching contribution plan which has a company match of 100% of the first 1% and 50% of the next 5% for a total company match of 3.5% of an employee’s 6% contribution. The 401(k) plan is available to all employees. On June 1, 2008 all eligible employees accrue future benefits under the Portable Pension Account (PPA) formula. This is a formula that gives compensation credit equal to a percentage of the employee’s prior calendar year eligible earnings. The percentage is based on combined age and years of service. The PPA plans is for employees who complete at least 1000 hours a year. The pension under the PPA is a lump sum payment or a number of annuity options.
Smith and Nephew Their defined contribution plan #2 was frozen on Dec 31, 2002. No one hired after Jan 1, 2003 is eligible. On January 1, 2010 company instituted a US Savings plan (401K) where the company matches employee contribution up to 50% of a 6% contribution by employee. There is a possible profit sharing plan by the employer but the contribution is at the Company’s sole discretion. The frozen plan paid 1.15% times the final average compensation times the years of service not to exceed 35 years.
Commercial Appeal They have a 401k and a defined benefit pension. For management, there is a 401k match of 50 percent up to 6 percent. On the pension, it is my understanding that you can get reduced benefits at 62 and full benefits at 65. UNABLE TO GET MORE DETAILS OF DEFINED BENEFIT PENSION
MECA They have a 401 (k) and they match employee contributions up to 4% of salary.
Orgill 401 (k) retirement savings plan. Employee contribution plan with the company matching employee contributions up to 3% of salary. At 4% the company puts up 3.5%. At 5% to 80%, the company puts up 4% of salary.
CACI, Inc. 401 (k) retirement savings plan. CACI will contribute 50 cents for every dollar employee contributes up to 6% of employee pay. The company funds will not be vested until the employee completes three years of service. After three years the company contribution will increase up to 6%.
Diversified Trust Company. 401 (k) retirement savings plan. Diversified contributes 3% of salary for full time employees. Full time employees can contribute as they choose up to the maximum allowed.
A locally owned business-to-business professional services company with 100 employees that has been recognized nationally as one of America’s 10 best companies in its size category to work for.
401 (k) retirement savings plan. They match 401k contributions at 50% of the first 6% of the employee’s contribution. So 3% of salary is the maximum employer match. Many companies stopped their 401k match in 2009. This company did have a five month hiatus on their match program in 2009, resuming it in Oct 2009. Many companies took longer to reinstate their match and some may not have resumed it yet. Currently this company’s match begins after one full year of employment. But beginning January 1, the match will be available after the first calendar month of employment.
AUTOZONE 401 (K) retirement savings plan. They match dollar for dollar for the first 3% that employee contributes and 50 cents per dollar for the next 2%.
401 (k) retirement savings plan. Maac will contribute 50 cents for every dollar employee contributes up to 6% of employee pay.
There has been a series of article in the CA recently about this subject. This subject has been national news all the way from Maine to California with demonstrations in Wisconsin, Ohio, Indiana, Pennsylvania and even right here in Tennessee.
I have been researching this subject locally and across Tennessee for some (more…)
As the voters prepare to vote tomorrow, I would like to bring to your attention a sorry example of how the MCS system handles open records requests. I filed three open records requests in 2010 and never got an answer to those requests. I finally filed suit in Chancery Court at a cost of (more…)
The City of Memphis is looking for ways to balance the budget. Well I have several multimillion dollar suggestions.
- Immediately adopt the Shelby County formula for retiree health care premiums where the cost for those retirees under medicare age is higher than the same plan for active employees. Also all retirees of (more…)