Pension Security, Equality…Today…
Government pensions are a hot-button issue across the country as more and more boomers head toward retirement and liabilities pile up. In addition, as is my understanding, while a number of private pensions go up, they are actually better funded and to some extent better protected due to Federal regulations. Just as federal law cannot dictate state employee law, neither can it directly dictate state pensions, except where they step into the wider net of financial services.
The state has an approximately $3.8 billion pension shortfall. Now, that may seem like a lot of money, and it is. But it is also only 18.5% of the entire pension liability for Massachusetts. Compared to the potentially catastrophic shortfall in NYC, estimated to be as high as $49 billion, we’re kind of lucky. However it will require us taking a look at the system as a whole.
However, starting small and starting with keeping ridiculous add-ons from being the responsiblity of our children, me included is a good first step. Treasurer Cahill supports legislation, which would only look at salary when determining pension payout. State Senate Minority Leader Republican Richard Tisei suggests a more expansive reform which would cap a potential annual pension at around 93,000 grand, I assume adjusted as needed according to inflation.
However, this proposal, as the Globe points out, is probably dead on arrival. Cynically, because it is a GOP idea it will not pass. Because the Globe’s editorial board cannot make such outrageous claims, as I can, they note that unions will oppose any measure that curtails potential pensions. However, I would challenge the unions to produce any member who could ever hope to collect a pension as sweet as $93,000 annually.
Frankly, everybody needs to be adult about the situations with our pensions and wider fiscal situation. Amazingly, though admittedly with a gun to both their heads, union contracts were negotiated after a long Mexican standoff in Springfield. I congradulate the municipal unions for recognizing that the choice was not between getting what the city offered and what their members wanted. Rather it was between what the city offered or more layoffs and less benefits anyway.
Responsible negotiation on Beacon Hill and elsewhere is the only way we can guarantee that we can pay the pensions that workers have earned. The alternative is broken promises for everyone. Taxes won’t help, but only drive more people away compounding the problem. It’s easier to convince voters you’re taxing them for a road or “T” service, than for a pension. We shall see.