Bob G. wrote on July 19th regarding pension obligations for retired government workers. The implication seemed to be that they are excessively generous and should be cut. I am a retired teacher and a taxpayer, so I have two dogs in this fight. As a taxpayer, I want to hold the line on government spending. As a retiree, I depend on the money I was promised for my livelihood.
Pensions are a contractual obligation backed by the ‘full faith and credit’ of government. If government had properly funded the liability in the first place, the money to pay pensions would be there today. That it is not cannot be laid at the feet of the retiree. In Maine, at least, we paid in to our pension system with every check. The state’s contribution must be considered as deferred income, money we earned but were not paid at the time. I took a pay cut to become a teacher because I felt it was a job that needed doing. I did so with the understanding that my retirement was secure. After 25 years, I receive 50% of my pay before deductions for health care, taxes and so forth.
Many state and local governments spent the money they should have set aside for pensions on other things. As a result, for example, retirees have lost our cost of living allowance (COLA). As time goes by, this could become a serious problem for many of us.
A contract is a contract. People like me planned their lives around the promises that were made. I can’t go back and get another career. In this economy, I can’t even get a job! The money I receive from my pension is money I earned over a lifetime of hard work. Good teachers put in as much time outside of school as they do in the classroom: in my case, about 60 hours a week, twelve months a year.
If spending cuts are necessary, negotiate different arrangements in future and ensure they are fully funded. And maybe, just maybe, before you cut pensions we should take a look at benefits that are paid but not earned. – Randy in Maine
JWR Replies: I agree that contractual promises should be kept. Obviously, what needs to be implemented are two tier systems. Any new hires would be enrolled in a scaled-back retirement system. The key change would be that retirement payments would not begin until age 65.