Another piece of security getting wiped out
By Lee Russ
Wednesday, August 09, 2006 at 03:18 PM
WTW has covered the dire condition of private pension funds both here and in the United Kingdom, as well as the likelihood that many American families are going to be left high and dry (at the mercy of their Social Security benefit). Now "they" are working on public employee pensions, too.First, amid growing outcry that public employees have far too generous pension rights now that private pensions are biting the dust, came news that the Republican candidate for Governor of New York has formally proposed ending pensions for public employees.
Then, from the NY Times, came the background that explains the larger problem. Just like the private corporations who cheaped up on their pension contributions, forcing them to hand the problem funds over to the Pension Benefit Guaranty Corporation when the underfunding got to dangerous levels, governmental units have been doing the same.
In fact, that's what set into motion the publicity about government corruption in San Diego, a city that still has not recovered from their massive unfunded pension obligation.
But as the NY Times story points out:
Across the nation, a number of states, counties and municipalities have engaged in many of the same maneuvers with their pension funds that San Diego did, but without the crippling scandal -- at least not yet.
It is hard to know the extent of the problems, because there is no central regulator to gather data on public plans. Nor is the accounting for government pension plans uniform, so comparing one with another can be unreliable.
But by one estimate, state and local governments owe their current and future retirees roughly $375 billion more than they have committed to their pension funds.
And that may well understate the gap: Barclays Global Investments has calculated that if America's state pension plans were required to use the same methods as corporations, the total value of the benefits they have promised would grow 22 percent, to $2.5 trillion. Only $1.7 trillion has been set aside to pay those benefits.
Count on it: public employee pensions--at least defined benefit pensions that guarantee the retiree a set amount of money per month--are dead. There's no way that Republicans, or even many Democrats, will allow good pensions for "public employees," who they perceive as overpaid and underperforming, when private pensions are disappearing. Not in this atmosphere.
Gee, can't wait to see the coming attack on our national ability to afford Social Security. As it stands now, that's about the last barrier to our complete return to those fun days of the 19th century, when being filthy rich meant something, and being poor meant being filthy, hungry, cold, and dead (roughly in that order).
What good is being rich if the poor people have some of the same benefits you have?