Monday, December 21, 2015

The "Manufactured Crisis" of Public Pensions and "What a Few States Debated in 2015"

“For years firefighters, nurses, teachers, social workers, roads crews and others across the country have paid a percentage of their salary toward their retirement security. Notably, in Illinois and New Jersey irresponsible politicians did not do the same. Instead, they skipped or reduced annually required contributions to their pension systems. Between 2001 and 2013, Illinois paid less than 80 percent of what it should have to its pension systems. New Jersey paid less than 40 percent of its obligation over that same time period.

“In 2015, workers across the country learned if they work in a state that is naughty or nice. Responsible states that make their yearly required pension contributions, not surprisingly, have pensions that are fully funded and in some cases have surpluses. That protects both taxpayers and workers. Other states fall in between. This year, many of those states considered adjustments to their public pension systems, and all of them rejected a move away from defined benefit pensions. Why are these states and most others choosing to stick with pensions?

“First, pensions remain the best way to provide retirement security, and attract and retain quality nurses, teachers, firefighters and other public employees. Pooled risk among pension participants means no one is left to fend for themselves against market forces. Second, 401(k)s have proved to be a tremendous failure at delivering retirement security -- with the exception of the super-rich. Finally, pension systems are on the road to recovery post-recession. Anti-pension ideologues no longer have a manufactured "crisis" moment to scream about. Let's look at what a few states debated in 2015…”

For the complete article by Bailey Childers, click here.

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