Demand limits to how much public pensions costs us
Wouldn’t we all like to be able to negotiate our own salaries and our own retirement benefit levels with taxpayer money?
If I were going to design a pension plan with extremely high benefit levels and absolutely no risk to me, I would design a plan exactly like our public pension systems.
Wouldn’t we all like to have lifetime pension and health-care benefits paid primarily with taxpayer money? Wouldn’t we all like to have the same pensionbenefit formulas as when salaries were much lower, thus creating annual pensions of more than $100,000 for many retiring long-service employees?
Wouldn’t we all like to have pension benefits that go up when actuarial and investment return assumptions are exceeded? It happened in the early 2000s when pension benefit levels were increased by approximately 40% after the stock market runup in the 1990s. Of course, those benefits will never go down regardless of how much the cost of those benefits go up and the stock market drops.
Wouldn’t we all also like to have automatic cost-of-living increases to our already high pensions each year, regardless of the funded status of the plan? It happens, along with spousal survivor benefits of 50-60% of the members pension.
Wouldn’t we all like to work at a medium-level position for most of our career, be promoted to a high-level position for the last three years and have our total pension amount based on the average of those last three years’ salaries?
Or, better yet, get promoted the final year and have the pension based on that final year’s salary?
There are no limits on maximum pensions and no reductions for age. Many pensions commence in the 50 years of age bracket. These are expensive, final salary pensions with all the risk on taxpayers — and the risks are enormous. The cost of these programs has no limits.
We have seen taxpayer-required contributions rise to exorbitant levels, as shown by the following entities of the Marin County Employees Retirement Association (MCERA): 63% of payroll for the City of San Rafael: ; 48% of payroll for the Novato Fire Department and 25% of payroll for the County of Marin.
These required taxpayer contribution levels are abusive to taxpayers.
My private industry employer offers a 50% employer match on the first 6% that I contribute from my salary. Thus, the maximum annual employer contribution is 3% of payroll. This is a typical private industry employer contribution 401(k) scenario.
In addition, many private employers (including mine) suspended the employer match during the pandemic.
Compare that to the required taxpayer contributions for San Rafael, Novato Fire and Marin County. You can then see why we have public budget problems and need tax increases throughout the county to make up for the diversion of money from services and projects to pay for pensions and retiree health care.
Remember when home prices (and property taxes) were much lower? We have had huge increases in home prices and property taxes, yet there is still not enough money to go around.
Private industry defined benefit pension plans have always had the ability to make adjustments to pension benefit levels when the cost of the plan became unaffordable.
It is unbelievable that public officials will not allow for a similar change.
It is taxpayers who pay for those pensions and are experiencing higher taxes and reduced services. If we do not make this an important issue, then it is obvious that our public officials will do nothing about it.
There must be some public pension reform to reduce costs to taxpayers.
There are no limits on maximum pensions and no reductions for age. Many pensions commence in the 50 years of age bracket. These are expensive, final salary pensions with all the risk on taxpayers — and the risks are enormous. The cost of these programs has no limits.