New York Times Predicts Class Warfare Over Teachers—and Other State Workers—Pensions
Writing at his NYTimes Your Money column, Rob Lieber implicitly ties together Peggy Noonan’s and Angelo M. Codevilla’s recent writings about the educated elite and the rest of us with problems with teachers pension funds and ends up predicting class warfare over how to make up the trillion dollar shortfall in funding pensions to state workers.
The battle, Lieber says, is between the haves and the have-nots:
The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.
The have-nots are taxpayers who don’t have generous pensions.
Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.
Sharing the burden of funding the gap and coming up with some kind of compromise makes the most sense, Lieber says.
But in Colorado, there’s already a suit filed by pensioners—the lead plaintiff is a retired teacher—who argue that any adjustments in payout are unethical.
Lieber notes that taxpayers aren’t so sympathetic:
…The average retiree in the fund stopped working at the sprightly age of 58 and deposits a check for $2,883 each month. Many of them also got a 3.5 percent annual raise, no matter what inflation was, until the rules changed this year.
Private sector retirees who want their own monthly $2,883 check for life, complete with inflation adjustments, would need an immediate fixed annuity if they don’t have a pension.
A 58-year-old male shopping for one from an A-rated insurance company would have to hand over a minimum of $860,000, according to Craig Hemke of Buyapension.com. A woman would need at least $928,000, because of her longer life expectancy.
Lieber seems to hope that a measure of civility might cool things down:
… if you’re a government retiree or getting close to the end of your career? Consider what it means to be a citizen in a community. And what it means to be civil instead of litigious, coming to the table and making a compromise before politicians shove it down your throat and you feel compelled to challenge them to a courthouse brawl.
Expect to see this battle played out in every state.
