Lawmakers study possible changes to state's pension plans
Would it be financially feasible for the state of Minnesota to scrap its existing guaranteed retirement benefit and instead offer a 401 -like plan for public employees? That seems to be the key question vexing lawmakers on the state's Legislative Commission on Pensions and Retirement after testimony about alternative design options this week.
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Saint Paul, MN
#1 Nov 9, 2013
Much like social security, our public pensions are similar to a legalized Ponzi scheme. They depend on new workers coming in and paying into the system so that there is enough money to pay benefits to those already receiving benefits. The grayling of Minnesota and shrinking predicted in the work force compounds the problem.
Is it fair to ask taxpayers to support retired public workers?
Is it fair to younger employees to increasingly support a system that they may never see benefits from?
Is it fair to break your promise to those who worked their careers for the public?
I don't believe there is an easy answer to this problem, no matter how much the politicians study it.
But unlike the Feds, who ignore the social security problem & just kick the can down the road, Minnesota is at least being more proactive than most in making adjustments where they can, gradually increasing employee/employer contributions, reducing or eliminating cost of living annual increases, and tightening up retirement rules.
One thing they should address quickly is "spiking", as this is an unintended and costly abuse of the system.
State government is moving more toward hiring private contractors in many areas. While this reduces the number of people who will be drawing benefits from the system in the future, it also reduces the money going into the system now.
Since contractors generally receive higher wages than their state employee counterparts, how about a "contractor fee" that goes into the retirement funds? That may not be seen as fair either. But there are no fair solutions to this ongoing problem.
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