Changes to State and Federal Pension Plans?

[erpowers]

Should the federal government and state governments make changes to their pension plans that would make the plans less generous? The USA Today editioral page has a debate concerning problems with state pension plans. USA Today's take was that there are major problems with state pension plans and changes need to be made.

The opposing view comes from Gerald W. McEntee, the president of the American Federation of State, County and Municipal Employees (AFSCME). McEntee claims that the problems in the pension plans can be fixed. He also claims that making changes to the current pension plan would cause even more problems for the pension plans.

In my opinion the retirement age should be raised to either 60 or 65 in states were it is not already at that age. I am not sure how much state governments are supposed to put into pension plans, but states could move to putting only matching funds into pension plans. In addition, I do not see the 401(k) plan as a bad idea.

Even though the debate is only about state pension plans I mentioned federal pension plans in the post in that the federal government also has a generous pension plan. That is why I asked if both the federal government and state governments should make changes to their pension plans.

I will admit states should have done a better job of putting funds aside for pension plans. However, I think states can change their pension programs. So, what do others think?

http://www.usatoday.com/news/opinion/editorials/2010-05-03-editorial03_ST_N.htm
http://www.usatoday.com/news/opinion/editorials/2010-05-03-editorial03_ST2_N.htm

[dana_b]

1. what the article doesn't mention

is that state employees are now beginning to contribute more to these plans. It also fails to mention that although a worker may retire in their 50s, they will also receive substantially less money than if they wait until their 60s. Someone waiting until their 60s to retire does not save the state a lot more $$.

401ks? Really?? No. Has anyone been paying attention to what has been going on in the financial world the last couple of years?

[damntexdem]

2. No changes should be made affecting retirees or those already vested in the plans.

And a 401(k) is not the same as a pension plan. I have been covered by both; and when offered a choice, I have chosen a defined-benefit pension over a defined-contribution plan, even though that creates a risk until one is vested in a pension plan.

The real story is in the following phrase from the article: "some states have simply failed to put away adequate funds to cover them." That is, states have made promises that they didn't keep, and some are now trying to weasel out of the promises. Worse, some state politicians have repeatedly shown their intent to raid the funds that have been put away -- stealing from retirees, current and future, in order to balance state budgets at the costs of those to whom they made promises in return for faithful service.

What USA Today is effectively calling for is further destruction of an important worker right. I don't see how those on DU could in any way endorse such vandalism.

[ProgressiveProfessor]

3. Your title is incorrect...its about state plans only

Feds went to a predominately defined contribution plan in the 80s. That has been fiercely resisted at the state and local level. I believe in the long term that is a superior solution for both the employer and employee.

[MajorChode]

4. Perhaps they should, but the article is complete shit

As if the "USA Today" at the top wasn't enough, you can tell from the very first sentence:

Even the most casual observers know the federal government has a serious debt problem that's propelling the USA toward the same cliff as Greece.

Greece has one of the highest debt to GDP ratios in the world. The US is not even in the same ballpark.

It only gets worse when they start quoting the American Enterprise Institute.

The only thing that's surprising is they actually linked the retort by Gerald McEntee that debunks all the nonsense.