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The unfixable problem with public employee pension funds

And that problem is that they are controlled by politicians. And politicians are all about the next election cycle. The result is they promise more than they can pay to win votes, and put off the day of reckoning until they are out of office. This can not be fixed as politicians are incapable of change. This is why the only long term solution is to phase out defined pension plans and replace them with 401K plans. 

Here is what a FSU professor writes about it.


Public pensions are crippling government budgets.

Phase out being the operative element.

the whole idea behind public employee positions is that public employees werent paid as good as workers doing essentially the same job for a private employer. However, particularly in Florida, the private employers started cutting pension plans and offering 401K plans that cost the employer less and depended on employee pay-in. The politicians in order to keep the union votes started using the pension plan as a form of compensation for the public employees, of course including themselves in at the highest rate they could. Now the cute little monkey that was the public employee retirement fund is now the 800lb gorilla that dominates the budget and no politician has the guts to actually risk re-election and stand up and say we have to change this, especially since public employees are for the most part well paid and immune from being fired without cause.

Seriously? The FRS system is one of the only SOLVENT state pension systems in the country. It is NOT a burden to anyone. The only reason it is being viewed with such disdain is because the politicos can’t touch it. As soon as they “phase it out”, the corrupt Tallahassee crowd will go on a spending spree with their ill-gotten gains. And where will that leave state and municipal govt’s? Easy; without any worth-while employees. You people want to know what poor service looks like? Get rid of the ONLY reason that young employees go into government, being the pension, because the pay is crap. You will see a mass exodus of qualified workers to the public sector and the people left will be the typical govt dregs everyone complains about. And holding the bag will be the citizenry who has to deal with an even less competent government.

But if they can make government jobs less attractive, then they will be easier to privatize. So it will be pay on demand services such as police, fire, roads, schools….so much for the common good. Why would you want to pay taxes to fund education if you don’t have kids? It’s a pay now or pay (substantially more) later. After all prisons are not cheap. Especially since many are “privatized” and not only do you have to pay for the services, but there is a corporate office, CEO, board, stockholders who have to get their profits.

I don’t know of many private companies that can say such a low percentage of their over all spending budget goes to payroll… If you look at the average pension cost being less than 3 percent of the over all spending budget for a city government in Florida……. really……you should read more than one report (that is paid for by non nuetral groups) You may want to actually have facts like, the db plan (FRS) makes .41 cents on every dollar, and if 77% of the people in that plan stay in Florida when they retire…… that means that profit is being put back into the local economy…….that the legislature has used billions of “surplus” over the past ten years to fill gaps in the budget…. this is the retirees money not theirs and not the taxpayers…… yet it is used to offset the cost to the taxpayer…. you may also want to look at what it is going to cost to have that defined contribution plan…. it costs more….. so be honest.. it is Wall Street brokers that want this conversion… because they will make tons of money…. wether the retiree loses everything or gains……. this is no innocent group wanting changes…… they have a very vested interest in changing Florida……

why should the taxpayer be on the hook IN THE FUTURE when liabilities are larger than the assets… you myopic union hacks can’t see the forest for the trees…
Jim A. is partially correct, the politicos also get these over-generous double dipping pensions – the fox guarding the hen house… however the idea you speak of is a false, public employees never got paid significantly less than the private sector – another lie perpetrated by union bosses to try to justify their own over-inflated salaries and benefits at the expsense of the membership

The benefits (i.e. pensions) are the only thing that 1) keep young, intelligent, qualified state-employees around and 2) about the only thing management can use to recruit said academic stars fresh out of college because it sure isn’t the pay. You get rid of the benefits, combined with the under-paid salaries, and how are you going to convince those bright young stars fresh out of college to be your next say…forensic scientists? You’re not. Or they will come in, get trained and in three years they’re gone to another state where they can make more money or have better benefits. So you end up with a very high turn-over rate. Then the state gets left with either a bunch of old-timers in their 60’s and 70’s working forensic evidence because the next generation never stuck around or the only new ones are under-qualified or uneducated cast-offs that only got hired because all the smart ones stayed away. But then again, who in the state of Florida really cares about the quality of the work state forensic scientists do? Mike Thomas doesn’t. And according to him the tax payers don’t. But he’ll sure gripe up a storm when some criminal walks because there’s not enough evidence to prosecute.

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