Great Communicators: Pension Reform
Ed. note: These are the remarks given by Dawn Meling, CF’s director of marketing & outreach, at the Great Communicators Tournament in Denver, CO. on September 25, 2014.
Thank you for inviting me to speak about pension reform in our state. But before I share with you solutions to our state pension crisis, I want to share why we need these solutions in the first place. And the why is a teacher I know named Bill.
Bill has taught public high school for over two decades and is nearing retirement. But he’s not just a teacher. Bill is a farmer, a father, and a grandfather.
For Bill, our state’s pension crisis isn’t political. It’s personal.
Bill is worried that our state’s pension situation has become so unaffordable that the government won’t be able to deliver on the guarantees that it made to him.
He’s worried that he won’t be able to afford the property tax hikes on his farm, caused by state pension costs.
Bill is worried that his kids and even his grandkids will be burdened with his debt from his pension.
And he’s worried that when he retires, his school won’t be able to attract a talented replacement, as future teachers are losing confidence in the sustainability of the retirement system.
Our pension system is failing Bill. It’s failing the thousands of teachers, public workers, and retirees just like him. And it’s failing taxpayers, all of us in this room, that must foot the growing bill. This isn’t fair to any of us.
So how did we get to this point?
Government workers receive a defined benefit pension plan. In short: it’s guaranteed government income for life. If the pension plan does not earn enough money to pay the guaranteed income, then taxpayers make up the difference.
Government pensions are inherently political. In good times, politicians increase benefits, and in bad times they pass the costs off to our kids. Or they don’t pay at all. And all the time, the politicians are controlling the pension plan.
Defined benefit plans are a false bill of goods that politicians have gotten away with selling to workers AND taxpayers. And now we’ve reached a point where we simply cannot afford the obligations that we have. Bill and his fellow public workers are faced with the reality that the so-called guarantees that were given them were just promises. And those promises will be broken if we don’t change the system going forward.
I want to be clear. Teachers and state workers aren’t responsible for this crisis. They paid into the system like they were asked. The problem is that politicians made bad promises to good people.
We cannot allow the unfairness of broken promises to our public workers. No more so than we can allow the injustice of burdening our children with paying for today’s debt.
So let’s talk about what we can do to make it right.
The solution is for the public sector to learn from the success of the private sector and put new employees onto defined contribution plans.
These plans take control back from politicians, and gives it to the workers. It ensures plans are funded and gives taxpayers relief and predictability. It protects our future teachers and public workers from being in the unfair situation Bill faces.
Current workers and retirees will keep every dollar and benefit that they have earned. And they can rest easier knowing that with the foundational changes fixing the broken system.
This gives Bill a real guarantee that our promises to him will be fulfilled. It gives our hope that they can stay in our state without being crushed with debt that we caused. It allows new teachers to trust that they will have a retirement system when their careers end.
And it gives all of us confidence that we have a sustainable system that will allow us to take care of our public servants.