Public Pension Underfunding: Another Form of Generational Theft

( – promoted by Rob “EaBo Clipper” Eno)

The Washington Post has an excellent piece on the collapse of the State of Rhode Island public employee pension fund.  Taxpayers are right to be outraged.  But the real theft is being perpetrated on younger public employees by the unions that they pay dues to.

In Rhode Island, public employee pension payroll contributions barely cover the benefit payments to current retirees.  As a result, the fund grows more underfunded over time.  As the Post put it: http://www.washingtonpost.com/…

The burden is also heavy for participants in Rhode Island’s pension system. Teachers contribute nearly 10 percent of their salaries to pensions, and other employees contribute slightly less. But the generous benefits promised by the government and the huge unfunded liability mean that most of that money goes to keeping up with payments to current retirees. That leaves little for future retirees and endangers the system overall.

So when today’s young public servants reach their golden years, there is zilch in the fund to pay their pensions.  The Post goes on to write about resistance by public employee unions to reforms that could preserve the viability of the public employees pension system:

Still, union leaders say the cuts being contemplated go too far. They note that generous retirement packages were meant to compensate the relatively low salaries of public workers. They also say the state could simply stretch out the calculation of its pension debt, or stick to more optimistic assumptions for pension investment earnings, to soften the blow on workers and retirees.

If I were a young worker in state or local government, I would be outraged by the unions and their political allies that are perpetrating this generational theft.

That union leaders and Democratic politicians have for decades opposed the adoption of a 401(k)-like system for public employees in Massachusetts is a travesty.  These young workers are literally having their retirement taken from them by current retirees–many of whom never put a dime into the system–and union bosses who resist any change to the public pension system.  Of course, most public sector union leaders are likely on public pensions themselves and thus have a vested interest in resisting change.    

This is not just a Rhode Island problem.  Indeed, Massachusetts state pension funds are likely to run out in the very near future as well.  http://redmassgroup.com/diary/…  

So how about it those of you that are or work with young people in state and local government–is there any sense of outrage at this?

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