Well, the weather outside is frightful. Maybe by the time you read this, it will be less so. The slow decline of spirits caused by deep winter overtakes us in insidious ways. It dulls our senses, and we miss the bears sniffing at our door. And it deadens our hope, so that we forget the flowers of spring that will be here, if we can just soldier on.
Your pension system has been affected by the winter too. Legislative Commission on Pensions and Retirement has been holding interim meetings to discuss ideas to change public pension plans and the funds that support them. All of the ideas presented provide one characteristic that makes them suspect: if put into play these ideas would move money from individual public workers, such as teachers, into accounts operated by investment professionals. These ideas promise to reduce the money taxpayers put into pensions for those public workers. These ideas are the sniffings of the bears at your door.
The big threat that is offered up by the bears’ politics of shock and awe is that the pension funds will go critical to the expense of the state and taxpayers to bail out pensioners. Taking that another way, it says that the state and taxpayers shouldn’t be help responsible for the people who provided the wealth of public services they enjoy in Minnesota. If we take the necessary steps to restore and maintain the funds, just as we should with healthcare and housing, education and transportation, Minnesota can continue to enjoy our great quality of life and behave responsibly.
The weak link, the bears believe, are the young workers, underpaid, independent, and ambitious selfies. Turn them, they believe, and they kick the props from under the plans. But these dedicated young workers are not irresponsible pawns who can be so easily duped. They don’t want to lose the pension piece of their contract with the public. They are simply being squeezed to do more and more without raises or recognition.
The bears don’t talk about state-wide pension plan ideas that would allow young people move to other jobs and continue to build their pension value. The “pension reform” bears talk about “defined-contribution” plans. Paul Buchheit, in a Nation of Change op/ed, 6 January 2014, says, “The average working household has virtually no retirement savings, but it doesn’t matter to business-happy privatization advocates, who don’t seem to recognize that this poorer half of America even exists.” It doesn’t work. So 40 years on, who will be there for them? The bears don’t care.
Monique Morrissey of Pensions & Investments Online, 20 January 2014, adds, “Although often assumed to save money, defined contribution plans are inefficient compared with defined benefit plans, which benefit from risk pooling, economies of scale and higher investment returns.” But of course, the money the bears hope to save is theirs, not ours.
Are there bears at work out there? You bet. The Arnold Foundation was funding WNET’s production of “Pension Perils” for PBS. Look at this excerpt from “The Wolf of Sesame Street” by David Sirota on Pando Daily, 12 February 2014:
“In recent years, Arnold has been using massive contributions to politicians, Super PACs, ballot initiative efforts, think tanks and local front groups to finance a nationwide political campaign aimed at slashing public employees’ retirement benefits. … According to its own promotional materials, the Arnold Foundation is pushing lawmakers in states across the country ‘to stop promising a (retirement) benefit’ to public employees.”
As a result of Sirota’s blog post, The New York Times (Elizabeth Jensen, 14 February 2014) reports “WNET, the New York City public television broadcaster, said on Friday that it would return a $3.5 million grant it received … because John Arnold, a former hedge fund manager, has financially backed efforts to persuade municipalities to cut public employee pension benefits.”
Now the session has begun at the state capitol. We will be busy watching where the ideas go. Will they take root as rank weeds choking out our retirement gardens? Or will they become the compost to encourage the healthy blossoming of another season of Minnesota retirement summers, well deserved and happily spent.
Feel free to share your thinking with your legislative representatives.