Pension Panelist: “I don’t think the private sector is what we want to emulate.”
So said Alicia Munnell of the Center for Retirement Research at Boston College and one of the 12 appointed to the RI Pension Advisory Group. Munnell elaborated further:
“I strongly believe that [the private sector model shouldn’t be followed],” she repeated after the 2 1/2 -hour meeting, “because what you have seen in the private pension system is movement from the old-fashioned defined-benefit plans to 401(k) plans. The [hypothetical] employer puts in 3 percent; the employee puts in 6 percent” and, in the end, “people have such inadequate balances in those accounts. … That’s not anything we want to duplicate.”
No kidding. That’s why the solution is to take even more money from the poor private sector saps to continue insulating public sector pensioners from economic reality, right? Look, I understand (as NEA’s Bob Walsh states) that the majority of the public sector pensions aren’t “gold-plated,” but let’s stop acting like pension promises of the past are sacred blood oaths or that modest changes will result in people living in the poor house. The private sector model may not be great, but it’s what present and future taxpayers can afford.
She doesn’t like the employee needing to put in 3% but she’s ok with the teachers putting in almost 10%? How’s that math work?
How about this, we give the employees a choice, either they pay a reasonable amount for their pension contributions, let’s say 20% of their pay each paycheck, or they can switch to a defined contribution plan where they can pay any amount they want and they’ll be matched up to a max of 6%.
If these pension systems are so good, why are they only available to public employees? Why can’t I buy into the pension system? Let me make pension payments like they do and be guaranteed the same benefits that they are.
And Walsh may be correct that pensions aren’t “gold-plated”. They take on that appearance when people have multiple pensions. That was never the intent of the pension system. The intent was that you work your lifetime for a group and then they take care of you in retirement. The intent isn’t that you work 20 years in one department and earn a full pension and then “retire” and then go work for a different department for 10 years or so and then “retire” and then move on to another job and earn another pension.
I recently heard a caller on the Buddy Cianci show (that Buddy knew personally) talking about pensions and I could tell that Buddy was a little uneasy about the guy. FInally Buddy asked the question that he had in his head, “How many pensions are you currently collecting?”. The caller chuckled and answered “Five”. Buddy said something like “yeah, five, wow”.
That is one of the big problems with the pension systems. People collecting more in their pension than they ever earned while working. That is a gold-plated pension SYSTEM.
“That’s why the solution is to take even more money from the poor private sector saps to continue insulating public sector pensioners from economic reality, right?”
This woman is an academic and pro-union. She should not be on this pension board.
It is a travesty that the stakeholders are part of this group… Bob Walsh, while sitting on this board, is cutting deals and literally bribing people in the General Asssembly to enact binding arbitration which would render any pension reform meaningless.
The state has lost its soul… our leaders are corrupt and dishonest …
move out now while you still can.
In MOST 401(K) retirement accounts, the employee can deposit MORE then 6% if they wish. It is just not completly matched by the employer! COME ON! If the employee can not (for some reason) deposit more then 6% of their income, there are other retirement accounts available for them! PLEASE “academics”, do NOT mislead the public…or did I forget, we the public are the stupid ones, who will (you think) swallow ANY of your “Learned” statements. What the blazes is this? “Let them eat cake”??????