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I'm considering leaving the public sector for private. Please help me learn the smart way to negotiate employment offers and understand the real value of my current package.
July 10, 2012 2:28 PM   Subscribe

I've been working in local government in a mid-level administrative job for six years. My satisfaction level is low, but the benefit package is generous (we're a small local entity contracting benefits through CalPERS), and the job is as secure as anything for the foreseeable future. Would I be crazy to leave it?

A previous employer of nearly ten years has been making overtures (again). At this stage of the discussion she's offering to beat my current salary but as a small business I know she won't be able to match my retirement benefits when I counter with a fuller explanation of the value of my current package. She really, really wants me back though, so I feel like I have some room here in terms of getting her to move on salary.

If this was just a gut call, I'd jump ship. Public sector is living up to what I hoped it would be--I'm a hard worker and very results oriented, and miss being able to own and complete projects rather than riding the glacial, tortured pace of bureaucracy. But I'm trying to be smart, and I have a few weeks left to decide.

Questions:

1) For those who are familiar with CalPERS specifically, how do I accurately put a value on it? And what could I ask for that would be smart mitigation for losing it? I have six years of accrued service into CalPERS and am 2.5% at 55. FWIW, our small entity has (unlike many other agencies) fully funded its plan.

2) (Optional as I'm reading similar AskMes on this, so this is only if you have something extra to add, thanks.) When/if I decide to leave the current position, I suspect there will be a counter-offer (a promotion has been dangled in front of me for almost year and I've been asked repeatedly to be patient--I have cause to believe this would suddenly manifest if I decided to leave). How does this process work? I do not understand that negotiation process at all. Do I get an offer letter in hand before giving notice? Not give notice but lay out my outside offer? Personal anecdotes and web resources very much appreciated.

Skip-able, personal background for context if it helps: I'm 48. I'm a high school graduate living in an expensive, highly educated US city. Married, no kids, no debt, no house, but under 20,000 in retirement savings and a buffer of a few months in the bank. Both current and former positions would be in the $55-60k range. My resume can only be described as "colorful"--it's interesting and good for cocktail party conversation but not so good for job hunting as there's no specific career trajectory or education component.

I have my own misgivings about public employee pensions, no need to turn this into a forum on that issue, thanks. But this is probably the one and only time in my life I'll have two employers wanting me at the same time, and I'd like to make the most of it and not bungle it. It's also worth mentioning that my day job is my day job - my true passion is painting, which historically has paid for itself but not much else. So my real objective here is to do the smart thing financially.
posted by anonymous to Work & Money (5 answers total) 2 users marked this as a favorite
 
My parents are living large collecting CalPers, Social Security and a Federal Government pension. They make more in retirement then they ever did when they were wage earners. Go figure.

By all means, look for something better, but look for another state agency or a Federal Government agency. Don't jump just for salary, you're in the system, that gives you leverage.
posted by Ruthless Bunny at 2:36 PM on July 10, 2012


So my real objective here is to do the smart thing financially.

Then stay where you are. Job security is hard to come by these days, great benefits even harder. Is there any way you can support your former employer's small business in a freelance or project-based capacity?
posted by headnsouth at 2:38 PM on July 10, 2012


Is there any chance you can get cash out of that CalPERS account? You have six years in at age 48; I'd guess you'd have to be at least 70 (the way things are going) to get a decent pension out of them. Anyway, if there's no way to turn it into cash, I'm not sure it's worth that much in negotiations, especially if you have enough years in the private sector (you should if you had steady work from age 18 on) for Social Security retirement.

Also, though, consider your disability and health benefits - those have a very tangible value.

(My guess is that your current job, which is probably unionized and civil-service-protected, is much safer than going to a small private employer. With your age and education, losing that small employer job would be catastrophic.)
posted by SMPA at 2:41 PM on July 10, 2012


Both current and former positions would be in the $55-60k range.

I will tell you right now, your benefits and pension are worth way more than $5k/year. $5k for less job security and worse benefits and no pension is a joke.

Here's a handy way to start calculating what it might be worth to you (all in real dollars):

1) Calculate what 25 years at your pension rate will total (this would get you to 90 years old if you retire at 65);

2) Calculate what a partial pension based on time worked looks like and multiply that by 25 (you will get this anyways if you leave today);

2) Calculate what you will contribute annually to your own pension and multiply that by 17(if you're retiring at 65);

3) Subtract #2 from #1 to get the amount of your pension that's contributed by someone else;

4) Divide that number by 17 (or the same number as #2). That is how much salary it will take for you to contribute the same amount to your own retirement fund annually to match the pension.

So, example:

$40,000 pension x 25 years = $1 million in your pension's future value
$20,000 pension x 25 years = $500,000 in pension value if you left today
$400/month (your monthly contribution to your pension now) x 12 months x 17 years (years left to work) = $81,600 in your contributions left to make
$500,000 - $81,600 = $418,400 in pension value you are giving up by leaving today
$418,400 / 17 years = $24,612 in annual contributions you will need to make to equal what your pension will be worth.

These numbers may move a little due to your circumstances, and do not calculate for portfolio returns or inflation on your pension, but really it gives you a ballpark for how much your pension is worth to you annually and what it would take to compensate for just that, not including other benefits you might have.
posted by Rodrigo Lamaitre at 3:01 PM on July 10, 2012


Nthing what everyone else said.

I love my boyfriend so that's why I plan to marry him ... but his 23 years of paying into our state's retirement system doesn't hurt either.

Also your age and the amount you have put away for retirement savings would make me very, very nervous about jumping ship.
posted by nubianinthedesert at 3:57 PM on July 10, 2012


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