Dirk Stemerman: Public pension reform

By Dirk Stemerman, Monterey County The Herald 

No issue seemed to garner more attention — and legislation — nationwide in 2012 than pension reform. Suddenly, states and municipalities discovered that they purportedly could no longer afford to pay retirees the benefits they were promised.

Sellers’ remorse, as it were, set in as governmental entities realized they had negotiated themselves right into the red. For their part, unions woke up to the painful realization that they might be victims of their own collectively-bargained successes.

Workers who relied upon promised retirement benefits found themselves scapegoated. While there are surely some sensational examples of pension-spiking baby boomers collecting six-figure payouts before they even received their first AARP magazine, such is not the norm.

Many of these employees worked at government jobs for decades in lieu of more lucrative private sector employment, precisely because of the retirement security such employment supposedly offered.

Nevertheless, the problem is real. Nationwide, unfunded pension liability estimates reach into 13 figures. Promised benefits are high and the labor force is not replacing retirees with enough workers. Retirees are living longer and retirement age has not kept up with retiree life expectancy.


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