Globe Editorial: How Pensions go awry

Ed comment:  I should point out that I'm not rabidly against all pensions.  Cops and firemen do deserve solid benefits, so that the dangers of their profession do not limit their career.  And I don't have a big problem with pensions in general, especially if there is a tradeoff with social security.

Where my hackles get raised is when pensions are, in my opinion, excessive or abused.  From my understanding, pensions are intended so that we do not become destitute in our old age when we can no longer work.  I also believe that governmental pensions were traditionally somewhat generous as compensation for wages that lagged the private sector.

My concerns include:

Public sector wages are no longer lagging private sector wages.  Police officers, as just one example, seem to make close to six figures.  While this includes overtime, it still probably outpaces their peers (college grads with professional positions) in the private sector.  Additionally, most college grads in the private sector are salaried, so they might work 45 or 50 or 60 hours for their salary.

Spiking the system:  The military is well known as a career from which you can retire (if you don't get killed in combat) after 20 years. However, the pension is based on your last 3 years (I think) of BASE wages only.  Various allowances like meals allowance, combat pay, parachute/danger pay, flight pay, etc., are not included in pension calculations.   It really "frosts my nose" when I hear about perks in our local systems such as the ability to count OT or unused sick time as part of your pension calculation, not to mention legislators receiving pensions AFTER THEY ARE VOTED OUT OF OFFICE.

Limits:  I've frequently heard that the average state pension is around $20k.  Look, if you were a clerk or drove a bus for 20 years, I don't begrudge you your $20k/year.  I do, however, have a problem with any pension that equates to more than what most of us earn while working.  I think there should be a pension cap of $75k or $100k/year.  Bottom line- that's enough to live on, and we're paying you to keep you out of the poorhouse, not to fund your Cape home or boat or your grand-kids' college.

Legislators: Should NOT receive any pension. At all.  You do not have a job, you are representing the people for your elected term.  Perhaps removing pensions for elected officials would serve as a term-limit; an idea we all seem to like but which may not be constitutional. 

More on this later.  Brief note from the Globe below. 

How pensions go awry

On Sunday, the Globe editorial page considered the way public pension expenses grow out of control. Dozens of special bills designed to enhance the pensions of individuals - or move whole classes of state employees into a pension category that offers more generous benefits - are a regular fixture on Beacon Hill. We called out some of the more egregious ones.
Discuss

COMMENTS (1)
Many boston.com readers responded with suggestions about how to reform the system. VastConspirator asked, "How about no pensions until age 65? The taxpayers who fund the pension system have to wait until age 65 to get Social Security. How much money could the state save if we made that the minimum age for collecting pensions?" Other readers advocated putting workers into 401(k) plans instead of defined-benefit pensions.

But another reader noted that the state currently isn't paying Social Security costs for most of its workers. "Please explain how the state can afford to go the 401(k) route," wrote jayboat, "if it means Social Security for all state workers instead of the existing pension plan. You see, the state will need to come up with more money to contribute their portion of the Social Security tax than what it costs to support the present pension system."

Reader solvera cautioned against demonizing state workers, writing, "I'm a 'regular' state employee, meaning I work for a state agency and I bust my hump at this job, same as I did at the nonprofits (and before that, retail jobs) that I worked at before my current job. Most of the people I work with are pretty normal, hardworking ethical people who will do whatever is asked of them." But the same reader also suggested that taxpayers should not subsidize public employee benefits: "I pay about 10 or 11 percent of each paycheck into the state pension system now, and I do understand why non-state employees are frustrated. You shouldn't have to pay for my retirement."

Meanwhile, joeshuren predicted that the present system can't go on forever. "The state continues to make false promises to employees, that it will pay them money in the future that taxpayers will in the future end up paying more and more for. But sooner or later there is a limit. Generally it is a taxpayer revolt." This reader noted that Vallejo, Calif., declared bankruptcy last year because it could no longer afford its employee salaries and pension costs.