Meister: It's not true, what they say about pensions

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By Dick Meister

Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.

So, what are we going to do about those big fat pensions collected by public employees? You know, those retirement benefits that supposedly are threatening to bankrupt state and local governments everywhere.

What to do? That's easy. We can make that problem disappear quickly – just like that! We need only realize that the problem simply does not exist, despite the claims by rabid anti-union forces and the many people who they've duped.

Here's the basic situation: Anti-union forces are attempting to weaken the public employee defined pension plans that provide employees a specific monthly payment on retirement. The plans cover about five million older Americans, providing money that many drawing benefits very much need to escape poverty and stay off government assistance.

Those receiving the benefits, many at rates granted originally in lieu of pay raises, in turn create more than $358 billion in economic output nationwide and create more than 2.5 million jobs.

State spending on pensions amounts to no more than 4 percent of the state budget, on average. In most states, employees must contribute up to 8 percent of their wages to their pension fund, a bit more than private employees contribute toward their pensions.

You should also know that, despite what you may have heard, government pension funds are not going broke. They in fact have been growing as Wall Street has been doing better.

Those basic facts and others that are often lost amid the anti-pension clamor from those on the political right who would just as soon do away entirely with pensions, But they were laid out clearly by panelists in a forum earlier this year sponsored by the National Public Pension Coalition.

Panelist Dean Baker, an economist who is  co-director of the Center for Economic and Policy Research, noted the concern that pensions are endangering government services stems from "a crisis that has been invented" by employer groups.

Baker said the make-believe crisis stems largely from the 2008-09 market crash. That caused an estimated $800 billion of the $1 trillion shortfall in pension plans, but he said the plans should be able to recoup their losses.

But what of the public employees supposedly drawing pensions of $100,000 a year, or even more? As panelists pointed out, they're pretty much make-believe, too.

Then how much do they make? In New York, as another panelist, New York State Controller Thomas DiNapoli reported, the average pension, including those of police and firefighters, is just a little over $19,000 a year. Three-quarters of New York's pensioners overall get less than $30,000 a year, and less than one-half of 1 percent get more than $100,000.

Panel member Janet Cowell, North Carolina's state treasurer, said the average pension in her state is a mere $22,000 a year. She said fewer than 300 retirees get $100,000-plus pensions – "and some of those are basketball coaches."

Rhode Island retiree Dolores Bresette, a voice from the trenches, as it were, told her unfortunately not uncommon story to the panel.

She said "I worked for the State of Rhode Island for 37 years and contributed 9 percent of my salary to my pension fund. Now, after years of saving and preparing for my retirement, so much of what I and thousands of other public workers were promised is being taken away." That's because of last November's enactment of a "Retirement Security Act" which, among other things, suspended cost-of-living adjustments for Rhode Island retirees indefinitely.

"There are real human implications of the current efforts to dismantle public workers' pension funds", Bresette declared, "and people in Washington and the country need to see that."

She and other panelists warned that "in addition to the human implications there are serious social and economic consequences that will develop over the long term if the shift away from defined-benefit pensions continues. Instead of dismantling public employee retirement systems, policymakers should be working to improve retirement security for the private sector workforce."

Policymakers will soon face another major crisis related to retirement benefits, noted panel member Hank Kim, an expert on public employee retirement systems. He said that overall, pension funds covering privately employed workers now contain more than $8 trillion less than they'll soon owe retirees.

If pension benefits are denied or reduced as a result, that could very well cause a significant segment of the 75 million baby boomers to delay retirement. Which would put them in competition for jobs with 80 million younger workers, the so-called millennials, over the next 10 to 15 years.

That could also cost taxpayers. For, as panelist DiNapoli said, if needy retirees couldn't find jobs that would provide them enough to live on, the government would ultimately have to provide them welfare grants.

The pension opponents wouldn't be left with much of a choice. They'd have to abandon their anti-pension position or agree to tax increases which, as you might imagine, they don't much care for.

Either way, we'd be winners.

Dick Meister, former labor editor of the SF Chronicle and KQED-TV Newsroom, has covered labor and politics for more than a half-century. Contact him through his website, www.dickmeister.com, which includes more than 350 of his columns.

 

 

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Comments

means that if the markets do go down, the pensions that are paid are far more than the underlying fund can sustain, meaning in turn that the taxpayers are on the hook for the difference.

So yes, buoyant markets might bail us all out but there is no guarantee. While with a DC plan, that the rest of us have, there is no corresponding unfunded liability.

What needs to happen is for the public sector to do what the private sector has done, and migrate from DB to DC. In that ay, taxpayers will be relieved of the potential burden of funding both their own pensions and those of others too. That's the real iniquity and why voters are so angry about this mess.

Posted by Greg on Mar. 24, 2012 @ 8:36 am

Your Generation
Written by Thomas Paign, 2012
Performed by TBD, 2012

U People will try to keep us d-down (Talkin' 'bout your generation)
While U work us into the ground (Talkin' 'bout your generation)
To support a future that’s already been s-s-sold (Talkin' 'bout your generation)
I hope U die before U get old (Talkin' 'bout your generation)

This is your generation
This is your generation, Granny

Why don't U all f-fade away (Talkin' 'bout your generation)
U better listen to what we all s-s-say (Talkin' 'bout your generation)
We are trying to cause a big s-s-sensation (Talkin' 'bout your generation)
To defend our future from your g-g-g-generation (Talkin' 'bout your generation)

This is your generation
This is your generation, Granny

Why don't you all f-fade away (Talkin' 'bout your generation)
And don't try to s-steal our p-pay-day (Talkin' 'bout your generation)
I am trying to cause a b-big s-s-sensation (Talkin' 'bout your generation)
I'm takin’ this message to the entire n-n-nation (Talkin' 'bout your generation)

This is your generation
This is your generation, Granny

Pop your boner pills and p-play away (Talkin' 'bout your generation)
Kick the can again our w-w-way (Talkin' 'bout your generation)
We’ll no longer do what we’ve been t-t-told (Talkin' 'bout your generation)
Gotta steal our future back from the o-o-old (Talkin' 'bout your generation)

This is your generation
This is your generation, Granny

U People will try to keep us d-down (Talkin' 'bout your generation)
While U work us into the ground (Talkin' 'bout your generation)
To support a future that’s already been s-s-sold (Talkin' 'bout your generation)
Yeah, I hope U die before U get old (Talkin' 'bout your generation)

This is your generation
This is your generation, Granny

Posted by Thomas Paign on Mar. 24, 2012 @ 12:08 pm
Posted by Guest on Mar. 24, 2012 @ 3:19 pm

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it." You have to hand it to the political right, the U.S. Chamber Commerce and big business - they've done a masterful job of turning public sentiment against civil servants and deflecting attention away from the real culprits: incompetent/unethical elected leadership, the banks and Wall Street. I retired after 31 years of service as a police officer. I am not entitled to Social Security or Medicare because as a public entity, my employer exempted itself from paying into those programs. I will always pay for private medical insurance. I paid between 11 and 21% of my gross into my retirement my entire career while my employer cut their contributions during the good times. We took no raises or increased contributions for any increase in benefits we received. I am all for eliminating public pension abuses, but this really isn't about pension reform as much as it is about union busting. The sentiment I hear from the public is "we got screwed so you need to get screwed too." The question I ask of the public I served is instead of trying to take my pension away, why aren't you asking for yours to be improved or restored? Maybe if your CEO wasn't making 100 times your salary there'd be money to do that.

Posted by Guest on Mar. 25, 2012 @ 11:52 am

both for your pensions and their own?

Can you further explain why you should retain DB pensions where you bear no market risk, while we in the private sector are all on DC schemes where we bear all the market risk?

Is it because you are somehow better than us and therefore deserve our subsidy and generosity? Why the double standard? Can you explain in terms that will not sound totally self-serving?

Posted by Greg on Mar. 25, 2012 @ 12:38 pm

And, folks, there you have it.

No sooner does somebody explain that "The sentiment I hear from the public is "we got screwed so you need to get screwed too" then "Greg" jumps in to ask why we public employees shouldn't get the same sub-standard, pitiful plan that he has.No

Too bad "Greg" can't seem to comprehend that the better solution is to improve all plans, now dismantle everybody else's. Yep, it's all about a race to the bottom--

Posted by Guest on Mar. 26, 2012 @ 8:20 am

You ducked my question so I'll repeat it. Why should I vote to pay more tax so that you can get a far better pension than I have?

What should be an ideal system is irrelevant. Explain to me why I should not vote to cut your pension given that it is far in excess of the norm?

Posted by Guest on Mar. 26, 2012 @ 9:18 am

You are deflecting.

With international competition for many jobs, your dreaming is a fail, while we can't outsource our ever increasing government bloat.

The problem isn't just pensions, it is the ever increasing make work programs of the various levels of government, why does SF have a labor commission and environment department. Total waste of tax payer money from hire date, pension plan and then grave.

Posted by Guest on Mar. 26, 2012 @ 10:24 am

The new sheriff (replacing Mirkarimi) is getting a $190,000 annual salary on top of her $170,000 pension.

Public employees are allowed to double-dip in San Francisco.

Your choice: public-sector pension reform or bankruptcy...

Posted by Troll the XIV on Apr. 15, 2012 @ 6:03 pm

let the city enter bankruptcy rather than pay these untenable benefits.

I feel quite certain that we could fire half the city employees and we wouldn't even notice the difference.

Posted by Anonymous on Apr. 15, 2012 @ 6:10 pm
Posted by Guest on Apr. 15, 2012 @ 6:42 pm

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Posted by Vincent Gabbeart on Jul. 10, 2012 @ 11:31 pm