Public Pensions, Once Off Limits, Face Budget Cuts

[Det_ard]

The very nature of defined benefit plans dictates that one group [[retirees) is guaranteed something and another group [[taxpayers) is tasked with fulfilling that guarantee, no matter what. Given the uncertainty in future pension fund returns, medical expense inflation and life expectancy, I don't see this as a good deal anymore for the public. Previously made promises have to be dealt with, but going forward it doesn't make sense to me to be on the hook for someone elses' defined benefits. The transfer of that open-ended risk has become too costly.

[Wesley Mouch]

The very nature of defined benefit plans dictates that one group [[retirees) is guaranteed something and another group [[taxpayers) is tasked with fulfilling that guarantee, no matter what. Given the uncertainty in future pension fund returns, medical expense inflation and life expectancy, I don't see this as a good deal anymore for the public. Previously made promises have to be dealt with, but going forward it doesn't make sense to me to be on the hook for someone elses' defined benefits. The transfer of that open-ended risk has become too costly.

The 'open-ended' risk is unfortunately a reality for everyone. Public employees, union employees, and just plain people. In the best world, our government would set some standards for care for its citizens that is reasonable, and make that a social cost.

There's no problem w/ defined benefit programs, unless a subset of people are receiving a disproportionate share of benefit -- and that's what many people think. They have no such benefit, and then are asked to fund the benefit for others. That is intrinsically unfair. The union argument that benefits for 'me' raises 'your' standard of living doesn't play well. And it plays less well when the gap between the pensioned-elite and the 401k'd taxpayers increases. [[And pity the poor without any retirement support)

I propose that 10% of all public employee pensions be set aside to fund defined-benefit programs for the unemployed.