I'm also guessing that the government's pension scheme is defined benefit: the risk that the scheme loses money is borne by the government, and you get your pre-determined payout unless the government goes bankrupt.
Defined contribution pensions are typically much more valuable, since they can obviate the need to save for retirement (or at least part of that need).
In the UK, it's extremely competitive to become a civil servant despite the mediocre pay. The reason is security, both in your job and in retirement.
I'd hedge, and prefer splitting my money between both.
What's going to happen is that paid shills will start publishing op-eds citing a handfull of executives and upper managers who gamed the pension payments system with overtime, resulting in massive payouts for themselves, drum up public outrage about lazy government workers, and pass an across-the-board haircut. It will, as always, be turned into a red vs blue issue - and half the time, red's in charge.
The fact that it is inflation adjusted is critical. To calculate the value of the pension plan, you would need to compute the NPV of an infinite series (assuming advancing healthcare).
The medical benefits are also quite significant and, for lower grade workers, will dwarf the value of the pension.
A relative of mine has been a federal employee for over a decade and gets neither of those. She has a TSP (like a government 401k) and that's it.
Maybe some federal employees got something like this at some point, but it's very misleading to just drop that into conversation like it's true across the board.
https://www.investopedia.com/articles/personal-finance/06251...
No, nowadays you have to pay in for retirement and medical benefits. Retirement money is partially matched, but health care generally is no cheaper than a good private plan.
My employer's healthcare plan costs my employer ~20k/year as long as I'm employed, more if I had children, yet for some reason, nobody ever counts that as part of AMAFAGOPL salaries.
I'd be curious how often Googlebot hits HN.
The other reply is a bit dated too, there's no longer a real pension available to new employees. There are probably still long-term employees or retirees kicking around with those older pre-1987 retirement packages, but all recent hires are on a plan that's pretty much equivalent to a 401k (Thrift Savings Plan) + a Basic Benefits plan (which is pretty basic and you still pay into. It roughly equates to getting two Social Security payments instead of one). The bulk of a federal employee's retirement funds will come from contributions to their TSP plan.
And guaranteed pensions are no longer a thing? What is left as a justification for below-market salaries? Employment opportunities in government-dominated towns (which do not have healthy private-sector economies), and more job security?
Yes.
>And guaranteed pensions are no longer a thing?
They pitch it as a three legged stool: social security, your 401k, and then a pension that pays out according to a formula (the amount you get in a year is calculated somewhat like pension := (1% of the average salary of the three highest paid contiguous years of service) * number of years of service, up to 20 (after 20 years the percentage goes down). Between the three legs of the stool you can probably get to about 60% of your income, which is supposed to be reasonable for retirement.
> What is left as a justification for below-market salaries? Employment opportunities in government-dominated towns (which do not have healthy private-sector economies), and more job security?
The salary isn't at all bad. For some specialties it's below market, but for the average joe it's pretty decent. But it's worth noting that, for me, the job security is key. I've made more money contracting, but contracts end, sometimes abruptly, and the peace of mind you get from having security is very valuable.
There is still a small guaranteed basic pension that federal employees pay into, but it's not really enough to retire on by itself. It's one part of their 3 part retirement plan. Couple it with Social Security (the second part) and you could probably scrape by and remain reasonably well fed and housed if you relocated somewhere rural and cheap, but if you plan on retiring and staying put you're going to have to save using the TSP (the third part) like anyone else saves with a 401k.
I can't provide a blanket statement for why people are federal employees though, it's probably different in each industry. My wife is part of the scientific and regulatory side of the oil and gas industry and [benefits included] she doesn't earn substantially less than her private industry peers in similar scientific roles. And that industry is notorious for frequent and cut throat boom-bust cycles which brings it even closer to parity over the long haul. As a software developer though, not a chance. The desirability of the roles they have and the compensation even with benefits is not usually very attractive and the federal hiring process is bonkers compared to most companies.
You're also expected to do so, while wading through a waist-deep morass of technological, beurocratic, and managerial stupidity.
In that agency, she can't just zone out and phone it in.
The GS-15 range for the DC area is $135k-164k. For federal government employees, salary only represents about half of their total compensation, which includes a lifetime inflation adjusted pension and medical benefits.