The panelists agreed that there is indeed a pension crisis — but specifics and how the terms are defined matter to the discussion.
David Cay Johnston, a professor of business, tax and property law at Syracuse University College of Law and Pulitzer Prize-winning former investigative reporter at the New York Times, was the most forceful in challenging the mainstream media’s reporting on pensions. When we talk about defined benefit pensions for public employees, he said, the only crisis is what he called “systematic wage theft” by politicians who have failed to live up to their obligations to fund workers’ pensions.
Pensions, like wages, vacation and sick leave, and health insurance, are earned compensation, Johnston said. And if employers willfully withheld salary from workers’ paychecks, there would be an uproar. The same thing needs to happen when elected officials in places like Illinois and New Jersey — which attract some of the most attention for their unfunded plans — fail to live up to their funding obligations. At the least, they should be voted out of office, if not prosecuted, he said.
Click here to watch Johnston’s remarks on the panel.
Teresa Ghilarducci, who directs the Schwartz Center for Economic Policy Analysis at the New School in New York City, agreed with Johnston that teacher pension plans in particular are generally well designed. They could be modified some, she added, to provide greater incentives to recruit and retain teachers, especially those with 10 to 25 years of experience who have been shown to be most effective.
Click here for the National Education Policy Center’s teacher pension review conducted by the New School in 2011.
Chad Aldeman, an associate partner at Bellwether Education Partners, offered a more conservative perspective with his stronger critiques of defined benefit pensions. He argued the current system doesn’t work well for an increasingly mobile teaching force. He also pointed out that some of the new, less generous tiers that the states have added for new teachers are especially problematic because it might take more than two decades for an employee’s pension to be worth what he or she puts into it.
Dan Pedrotty from the AFT’s research and strategic initiatives department said that the real pension crisis is not with public sector plans but with stingy defined contribution plans in the public sector – for those fortunate enough to even have a pension plan. For the handful of states that have converted their public pension plans from defined benefit to defined contribution, that decision has been a disaster, he said. West Virginia even ended up reversing that decision.
Click here to watch Pedrotty’s remarks on the panel.
The panelists offered a variety of suggestions for strengthening our retirement system.
The greatest agreement was on preserving Social Security, which Johnston called the most efficient national program we have, and expanding to include all the nation’s public employees. Another key recommendation raised by Pedrotty was for public pension plan administrators to cut ties with organizations advocating for the elimination of those very same retirement benefits.
Click here for the latest draft of AFT’s Ranking Asset Managers report, which documents hedge fund managers taking public pension dollars while undermining workers’ retirement security at the same time.
