Early Spring – From the Top

This is the first legislative session in a new direction for Minnesota. And we would like to think that this dove bearing an olive branch means it’s all better now, but 40 months and 40 weeks of bad economy will not recede quickly. Certainly the change is hopeful, and shows the good faith the people of Minnesota have shown in doing what’s right and good. However, there remains a serious economic situation, and there is hardly 100% agreement on what to do about it.
Minnesota’s public pension system represents a large amount of money for which the state legislature is responsible. A remaining threat to our TRA pension system is the pressure to abandon this defined benefit plan and replace it with a do-it-yourself personal investment system—for which the state would have little or no financial responsibility. Now, that might be good for investment brokers, who would make millions through fees on teachers’ investments, but would it be good for teachers? Duncan Black says, in a USA Today column, that “401Ks Are a Disaster,” joining a number of other analysts who are not profiting from these personal savings supplement tools, similar to 403Bs and 457s. Were Minnesota teachers forced into defined contribution plans, they would be cast from the public lifeboats. Meanwhile, those remaining in the defined contribution plan would represent a very, very large financial liability for taxpayers 20 or 30 years on.
Now, while the markets are doing well, is the time to do something to help shore up our present, healthy system. With a legislature and pension commission more likely to listen, we need to send them a simple message: Find creative ways to assure the health of the plan. Don’t abandon a proven lifesaver. Get ahead of the next big storm.
This message is especially important for active members to understand and support. You actives, especially younger ones, are being encouraged to go it on your own, appealing to your sense of individualism. You are being discouraged from trusting public support networks, treating communal action as somehow wrong. As active teachers, you are particularly susceptible to this politicized negativism; you are underpaid, over-worked, under evaluation threat, and prone to seeing retirement as just a vague idea when compared to heavy school loans and rent or mortgage payments that are all too clear and real.
Before I left MPS, I worked with some new teachers. I mentored or teamed with them, and they are still important to me. They and you need to know what my pension means for me, and what I had to do to get where I am. I’m not rolling in money, but my wife and I will probably get by okay. I hope to get into more buildings this year to tell you my story, because communicating is how we can work together for our common interests. Changing from our current, outstanding defined benefit pension system to a risky, costly individual defined contribution plan, even in a hybrid form, spells the eventual end to the investment fund that pays the bulk of pensions now leaves you at the whim of the market or annuities that may be depleted before you are.
Some teachers today, may see pension contributions as a tax. Well, if taxes are the price we pay for a civilized society, then TRA contributions are the price you pay for a civilized retirement.

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