Public Pensions and Employer/Labor Relations

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Public Pensions and Employer/Labor Relations

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After reading the Dorfman article, “Public Pensions are Still Marching to Their Death”, respond to the following questions: 

  • What are the political reasons public pensions are underfunded?
  • If the pension problem is political, what steps would have to occur to remedy the problem? Do you think such a remedy will ever take place?
  • If you do not see a remedy for the situation, what do you predict will happen to public pensions in the future?

Julie Jessee 

Budget, budget, and budget — it all comes down to money and greed.   Public pensions are mostly underfunded because politicians make campaign promises that can’t be upheld.   Look at our national deficit, if the big guys can’t seem to figure out how to control spending then how are the smaller guys in cities and states supposed to figure it out? Take the VA for example, veterans aren’t getting the care they should in some areas because budgets are tight. Employees worry that their pension plan will be effected if things don’t improve, positions get cut to save money, but wait, it’s the end of the year and the VA is shelling out millions of dollars in annual bonuses; bonuses for what, doing your job?  

In my opinion, the only way to fix the problem is to stop the greed. The only way to stop the greed is to bring people back down to a fair playing field. First and foremost, people must be held accountable. If they are hired to do a job then they should do it and management should uphold the standards for all employees. If someone is not capable of doing the job then they should be let go. If public programs stopped providing free handouts and asked people to work then maybe enough money could be saved to provide a livable pension to anyone that really worked for it.

Sadly, I don’t think any of my ideas or thoughts will ever happen. Through the years we have slowly created a society that enables others to do nothing for themselves, the begin to feel entitled to everything that many of us work hard for every day.

Tiffany Burt

What are the political reasons public pensions are underfunded?

The reason the public pensions are underfunded is because politicians use the money for something they can pay off fast. The same politicians are granting pensions benefits to state employees because it’s a vote-buying scheme with no budgetary cost( Dorfman, J., 2014). When the cost can be hidden and then deferred for future payment, politicians can easily get away with making unreasonable promises without fixing the cracks in the system( Atanasov, I., 2014). I think these politicians think there will always have money coming into the fund, so they aren’t worried about the people it affects, as long as they are taken care of. 

If the pension problem is political, what steps would have to occur to remedy the problem? Do you think such a remedy will ever take place?

To remedy the problem, it would require a new political calculus by the two parties most responsible : state politicians and government employee unions. But who’s to say this will fix the problem. They have been using this money for years, so how can this all change now. If this is how it’s going to continue, I don’t see a remedy because they will continue to use it and there won’t have anymore money left to give to the next generations. After doing some research, the thing I found that could help state pension, would be reform from the federal government. In order for them to protect taxpayers from the investment risk inherent in pensions, states need to abandon the defined benefit model. Instead, states need to go toward the defined-contribution model. If states go this way, it will provide employees with some fixed amount toward retirement while they are working, allowing them to invest the money on their own (Barro, J., 2012). 

If you do not see a remedy for the situation, what do you predict will happen to public pensions in the future?

If there’s no remedy for the situation, I believe public pensions will not be available for future workers. If they continue to go in this direction, maybe they need to look into other solutions to keep it alive .

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