Great for some perhaps such as public employees in Colorado and other states. Uninformed voters and legislators in many states have enabled public employees to reap windfalls of deferred compensation. The worst part about the windfalls is that the public employees refuse to acknowledge the nature of the windfalls. Public employees want to pretend that their retirement compensation is the same as retirement compensation in the private sector. Their pretense is done to concurrently increase their current and deferred compensation. Admitting that their retirement compensation is much higher than the private sector would invite budget scrutiny to the wages of career employees.
I made a recent presentation to the group that controls the the annual compensation survey in Colorado. Most other states perform similar surveys. The surveys are supposed to provide a realistic comparison of compensation between the public and private sector. In the surveys, the employer contribution rate for retirement is used to compare public and private retirement compensation. The contribution rate in the public sector vastly understates the value of the pensions for career employees while the contribution rate in the private sector overstates the value of the retirement compensation.
I presented my research results that provide strong evidence that the employer's contribution rate substantially understates the compensation value of the benefits. The group was adamantly opposed to any thought that the compensation survey should be revised. In some cases, they openly mocked the utter suggestion that retirement compensation in the public sector is much higher than the private sector. Here are some idiotic comments made by this group:
- Using private sector interest rates for purchasing lifetime annuities is ridiculous. I have friends in the securities industry who can guarantee a 13% interest rate using put and call options.
- The private sector gets social security.
- To provide lifetime income in the private sector, one should purchase a lifetime annuity every year to provide a higher interest rate.
- How dare a university professor talk to me about retirement compensation.
- The private sector has many other forms of compensation not available to the public sector so retirement compensation in the public sector should be much higher.