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The Great American Pension Swindle

The Sacramento Bee got its hands on 14 years of pension data from CalPERS and did some analysis. What it found should both surprise no one and cause outrage at the same time: on average, payout to new retirees in California doubled between 1999 and 2012, with police and firefighter pensions almost tripling in that period.

Even union bosses are starting to see that this is unsustainable:

Jon Hamm, executive director of the CHP officers’ union, said his members “have a difficult job, more than what most people realize.”

But after pressing for the higher retirement formulas years ago, Hamm has said he’s worried about the viability of public pensions. He supported Brown’s proposal last year to roll back pension formulas for future state and local government hires and shift more of the cost to employees.

Over the last several years, he has negotiated contracts that divert some CHP officers’ raises to pay more for pension and retiree health benefits.

“We’re trying to be part of the solution,” Hamm said.

We don’t begrudge anybody who’s worked as a cop or a firefighter (or a teacher or a sanitation worker) some reasonable security and dignity in old age, but the dirty collusion between politicians who “grant” big pension increases (and then refuse to pay for them) and union leaders who advertise their big pension “wins” without warning their members that these pensions aren’t secure is bad for everybody: for taxpayers, for retirees, for those who depend on state and municipal services.

It’s an ugly game, and the only way to stop it is tough laws that subject government and public agency pensions to the strict standards found in the private sector. Nobody who really cares about retirement security should object to it. Being against this reform means wanting the retirement scam to continue. Voters should be demanding pension reform from one end of the country to the other, tossing politicians who won’t go along out on their ears.

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  • Pete

    When you think of the public sector, think parasites.

    • NCMountainGirl

      That should be dumb parasites. Smart parasites know never to suck so much blood that they weaken and kill their host.

  • Jane the Actuary

    Back some years ago, in Illinois, under Governor Ryan (our second-most-recent crook of a governor), we had a state infrastructure program called Illinois FIRST (of course, the “FIRST” was some kind of cute acronym) — which included some big ticket highway reconstruction as well as lots of sweeteners. Pretty much every state legislator got some cash to spend in their district, in order to attend a few ribbon-cutting ceremonies (and further their re-election efforts). Wasteful spending, funded by 30-year bonds.
    The unsustainable pension promises are in this same category. Lawmakers promising goodies that future generations have to pay back. The only problem is that it’s the nature of public pensions that legislators can’t seem to stop digging, continuing to provide accruals at these unsustainably generous levels. At least “Illinois FIRST” was a one-time thing.

    • theresanursemom

      When voters start voting with the desire to serve the best interests of the whole, rather than just themselves, the Santa Claus act won’t be so rewarding for politicians. It’s easy to play Kris Kringle when the money to underwrite everything is stolen from those either too young to vote, or not yet born. We seem to be hopelessly corrupt, which makes the fact that we are the least corrupt nation on earth such a staggering thought. No wonder change for the better is so difficult and comes so slowly. Mankinds predilection towards selfishness is his greatest weakness and the biggest obstacle in the way of genuine progress whether one lives in a Democracy or Dictatorship.

    • cubanbob

      What cannot be sustained wont be. Unless the economy really turns around to the point that there is a sufficient amount of surplus tax revenues this isn’t going to turn out well. Do public sector employees and retirees really expect the private sector worker taxpayer who needs to work 40 or more years to get the max in social security and only to receive a substantially lower annual retirement income than the public sector retiree for on average only 15 years to really accept paying higher taxes for no benefit to them?

  • Reticulator

    You’re asking the government to pass laws to force itself to behave. Conflict of interest, there.

  • Notjack

    I got my MLIS in 2010. (Masters of Library and Information Science, the credential you need to become a librarian.)

    I southern Fairfield County, CT, full time librarians make an easy 58 to 64K to start. But there are no openings for full time, only part time.

    In the past what has happened is that full time librarians retire, collect their pensions, and then get to work part time. Full time librarians in public schools can also work part time in the town libraries. Both groups can double dip.

    When the town ratified its most recent contract, full time librarian received a 6 month retroactive raise. Hours for part timers were cut.

    I live in the town. Have no kids and pay over 7K per year in school taxes. I can only collect one check from the town, but teachers and ‘retired’ librarians can collect two.

    WRM is generous with other peoples money, especially mine,

    What hurts is that I would happily work full time at 20% less, but I am not allowed to do that.

    As for cops? We have some officers (not sargeants, not detectives, just regular cops) making 200K directing traffic that they get 50 bucks an hour for, working 80 hours weeks.

    We are being raped by the public employee unions and I am tired of it.

  • cubanbob

    Until and unless the mangers of these pension funds can be held personally liable for breeches of their fiduciary responsibilities there will be no financially sustainable way to insure the retires get their pensions.

  • Kevin

    We need to move to defined contribution systems. Public safety (police, fire, etc.) need a good disability system too – but it has to rigorously weed out fraud and questionable claims (and doing this last thing in a way that is both fair to injured workers and projects the public fisc from fraud is very hard).

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