Posted on 08/06/2010 12:40:54 PM PDT by reaganaut1
There’s a class war coming to the world of government pensions.
The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.
The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.
At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.
The figure comes from a study by the Pew Center on the States that came out in February. Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all. And some economists say that Pew is too conservative and the problem is two or three times as large.
So a question of extraordinary financial, political, legal and moral complexity emerges, something that every one of us will be taking into town meetings and voting booths for years to come: Given how wrong past pension projections were, who should pay to fill the 13-figure financing gap?
Consider what’s going on in Colorado — and what is likely to unfold in other states and municipalities around the country.
Earlier this year, in an act of rare political courage, a bipartisan coalition of state legislators passed a pension overhaul bill. Among other things, the bill reduced the raise that people who are already retired get in their pension checks each year.
(Excerpt) Read more at nytimes.com ...
Defined benefits vs defined contribution. We are now seeing the downside of defined benefits.
Having been a former State worker I can vouch that there are many lard asses soaking up taxpayer funded guaranteed pensions when they did little to earn them.
Hmmmmmmmm . . . . . . I wonder if there's a connection????
Big Deal. Slows the rate of collapse by a couple of percent.
Your pension is just as secure as Social Security.
Unfortunately, I wouldn't rely on either one.
“Your pension is just as secure as Social Security.”
I quit after 7 plus years and got my relatively small pension rolled over into an IRA. I couldn’t stand the stench of partisan politics under Gov. Bayh.
The unholy alliance between progressive politicians and public union bosses created this mess - blame them, not “class warfare.”
I suggest the following two-step solution:
Step 1: Make all public unions illegal.
Step 2: Actuarially determine a sustainable defined contribution plan for the average current worker and then pay current retired workers whatever that (annual) annuity payment turns out to be.
I completely agree with you. Unions have no place in public tax payer funded sectors. It isn’t fair to the tax payer who is the sole source of money, whether through a tax, fine, fee, levy, etc...
Let me add to it.
Tax all union pensions at 40 percent for all money in excess of what private industry pensions are.
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