Are Pensions Worth Fighting For?

Just ask the staff at The New York Times. 

Australian Experience Shows Pitfalls of Ending Traditional Pensions

PensionDialog welcomes the following post from the Alliance for Retirement Income Adequacy, a network of Canadian organizations which are promoting an informed discussion about the importance of income adequacy in retirement.

These days, in Canada and around the world, headlines talk about switching public sector pension plans from traditional “defined benefit” plans to newer “defined contribution” models—such as 401(k)-type plans that are in the U.S.

Those who favour the DC plans argue that they cost less – typically the contributions made by plan members and employers are lower – and that the employer (or the taxpayer) does not have to worry about shortfalls when the plan is underfunded.

The private sector seems to have embraced DC, or so the argument goes, so why not the public sector?

Public Pension Plans: Laboratories of Democracy

The Tenth Amendment of the U.S. Constitution protects states’ prerogative to design and implement public policies that address each state’s unique demographics, political culture, and fiscal constructs.

In the area of retirement benefits for employees of state and local government, the Tenth Amendment also applies to state governments seeking to meet the unique needs and objectives of their stakeholders–the governmental bodies and the public employees within that state. 

U.S. Senator Harkin Speaks Out for Pensions

Hidden cost of pension reform: Freezing benefits is complex issue

The current controversy over public employee retirement benefits has produced calls for freezing traditional pensions for government workers and replacing them with a 401(k)-style retirement plan. The argument for scrapping traditional pensions for public employees is that it would be less expensive for taxpayers.

A closer analysis released by CalPERS – “The Impact of Closing the Defined Benefit Plan at CalPERS” – reveals the issue is much more complex, with higher initial and long-term conversion costs that may not produce the expected savings and may, in fact, result in higher costs for taxpayers. This means taxpayers may end up paying more for less – higher costs for lower worker benefits.