September 17, 2013
By Dennis Persica
One of the more interesting philosophical flip-flops in the debate over public-employee pensions is how willing people are to use a level-the-field argument against government workers.
But first, a disclosure: As the surviving spouse of a former state worker, I get a monthly benefit from LASERS, the Louisiana State Employees Retirement System.
Back to the discussion: Look at the comment stream on any online story about retirement benefits for public workers, and you’re likely to see a certain sentiment expressed. It goes like this: Defined-benefit pensions are a thing of the past in private industry, so why should government employees still be entitled to them? [EXPAND Read more]
If you raised that “leveling” argument in any other discussion, though, you’d be shot down promptly, and probably by the same people.
Tax better-off folks to pay for government services for the classes below them? Answer: That’s socialism!
Enact affirmative action programs to ensure that opportunities are spread out to an ethnically diverse corps of job seekers? Answer: It’s not about race, it’s about finding qualified employees.
But talk about preserving government pensions, and suddenly we’re fighting like crabs in a barrel, with people demanding that public pensioners be dragged down to the level of private-industry workers who have no access to defined-benefit pensions.
There are a few things to remember about government retirees. For Louisiana state employees, as well as many other public employees across the country, there is no Social Security to fall back on. The same once was true of federal workers; they contributed only to the federal retirement system but not to Social Security. When President Ronald Reagan and a Democratic Congress decided to try to fix Social Security, they required federal employees to contribute to it.
People who’ve spent a lifetime in state or local government service may have only their public pension coming to them. That’s a major difference between those on a public pension and those on one provided by private industry. If the private pension program goes belly-up, the former employee still can draw Social Security.
Another difference between government-pension systems and private-industry pensions is this irony: If a private-industry pension program runs into trouble, its retirees wind up on the equivalent of a government pension, via the Pension Benefit Guaranty Corp. PBGC works as a kind of insurance company (businesses pay premiums into it) and takes over pension systems that run into trouble.
It will pay a retiree a maximum of $57,477 per year in benefits, and that maximum changes every year. So, someone with a pension from a private system that’s run into trouble can be assured they’re not going to be living on the street, begging for food. However, a government employee whose pension plan defaults –— and all eyes are on Detroit at the moment — has no protection. PBGC does not cover public pensions.
Yes, there have been abuses in the system, as we saw a few years ago in Jefferson Parish, but that’s no reason to let public-pension systems wither on the vine. After all, no one’s talking about shutting down Wall Street just because some people occasionally figure out ways to cheat investors.
Usually, the pension abusers are those who have enough political pull to game the system to their advantage. Most rank-and-file public employees don’t have that, and they would be the babies thrown out with the bathwater if we decided to let a troubled public pension system die just because private-industry workers don’t have access to similar plans. [/EXPAND]