|Don't reelect politicians or approve tax measures until the pensions are fixed.|
Marin Voice: Hold elected leaders accountable for cost of pensions
Pension benefits for newly retired full-service public employees in the Marin County Employees’ Retirement Association are now averaging close to $100,000 annually. They are even more expensive when you take into consideration that the form of benefit for non-disability retirement benefits include a 60 percent survivor annuity for spouses and disability retirement benefits include a 100 percent survivor annuity for spouses.
How did these pension benefits get so high? Public officials such as the Marin Board of Supervisors have negotiated salaries that did not take into consideration the additional long-term cost of pension benefits.
Following are the parameters that our legislators have established for public pension benefits:
• The benefits can never be reduced.
• These benefits may be in place for 50-plus years for employees, including cost-of-living adjustments for post-retirement benefits.
• The use of aggressive assumptions can justify pension benefits that are much too high.
• The cost of these benefits will be excessive if those aggressive assumptions are not met.
A prudent negotiator should have insisted, due to the above, that conservative, risk-free assumptions are used in estimates of the long-term pension costs associated with the negotiated salaries. However, nothing could be further from reality. Our elected officials have used assumptions far greater than private union pension plans, which have the ability to make adjustments to benefits if assumptions are not met.
Our officials have negotiated salaries and corresponding pension benefits far higher than should have been allowed and we are now starting to see the results of their reckless, fiscally irresponsible negotiations. Excessive pension costs are affecting all public services.
The Board of Supervisors either doesn’t understand defined benefit pension plans at all or is willfully negotiating these excessive benefits. Either way, they should be held accountable when up for re-election.
What can we do now to start getting pension costs down? There are two simple things that should be done:
• There must be some adjustable benefits, as allowed in the private sector. All private union pension plans have adjustable benefits. It is fiscally irresponsible that there is not some form of adjustment to benefits allowed if a pension plan accumulates large unfunded liabilities. It is totally self-serving that the only current adjustments to benefits are to new employees who are not even part of the accumulated unfunded liabilities.
• There must be some mechanism in place that mandates benefit adjustments for underfunded plans. Private union pension plans have a funded status “zone” analysis whereby a plan that is less than 80 percent funded must make changes to benefits and contributions to attain certain pre-defined funded status goals that are projected to attain 100 percent funded status. The Pension Protection Act of 2006, which unfortunately is only applicable to private union plans, does exactly this and has helped the funded status of underfunded private plans.
City and county elected officials must show courage in dealing with unfunded retiree debt.
To date, most have failed miserably. This leaves taxpayers footing the bill for their leaders’ apparent inability or lack of concern in both negotiating in the interest of today’s constituents and for future generations who will be stuck with the unwise decisions made now.
We must elect leaders who thoroughly understand the dire problem and vow to do everything possible to change it. We need to hold all elected officials accountable to the people they serve.
Bob Bunnell, of Novato, is a member of Citizens for Sustainable Pension Plans, a Marin pension watchdog group. He is a pension compliance manager for some of the largest private union defined benefit pension plans in Northern California.
/20180529/marin-voice-hold- elected-leaders-accountable- for-cost-of-pensions
Editor's Note: Marinwood CSD has a huge pension problem that it must address now, yet it keeps getting bogged down with legal bills, expensive projects and expanding staff, they have not addressed the STRUCTURAL problems with our budgets.
Post a Comment