The New Jersey Star-Ledger is spot on in
attacking a pension “reform” bill that would make the already corrupt public
sector union pension funds worse. In Another
gift to the unions, another pummeling for taxpayers, the Star-Ledger editorialized
Our lawmakers believe this is another good time to play Russian
Roulette with one of our six public pension plans, and lucky taxpayers get to
spin the chamber.
They are advancing a bill that would hand the Police and Firemen's
Retirement System (PFRS) over to the unions, giving them an unhealthy level of
discretionary authority, including boosting their own benefits on a whim.
This lesson in cockeyed fiduciary responsibility comes from a
provision that allows a new Board of Trustees - 12 members, with 7 union
appointees - the power to raise the cost of living adjustment with 7-5 vote.
Generally, the law prohibits increasing benefits in any pension system until it
is funded at 80 percent, but this bill will erase that requirement just for
PFRS - which is only funded at 64 percent.
"It's the same as
giving a benefit enhancement," said Sen. Declan O'Scanlon (R-Monmouth).
"It is simply irresponsible to give anyone unilateral control to enhance
their own benefits when taxpayers have to pick up over 70% of the cost. To do
so while also removing the 80-percent funding mandate is insanity. This will
screw taxpayers. There is no delicate way to put it."
The
same bill was shredded last May by
Gov.
Christie, who observed that the
authority invested in the new board is like "handing PFRS a blank
check." His former Treasurer, Andrew Sidamon-Eristof, was less generous:
"It's demonstrably insane," he
wrote last March, "to
give public employees unqualified power. . . .and require that government
employers (and taxpayers) pay the tab. Yet that's exactly what this
bill does."
It’s nice to be on the same side of an issue as
the Star-Ledger for a change. I left these comments:
“Let's clarify it for them: If the union
members vote to boost their benefits - unilaterally - taxpayers get stuck with
the bulk of the bill.”
Yes, this is insane. It’s
worse than what we have now, with politicians promising benefits that pass the
cost off to future taxpayers.
So here’s the solution: Give
the unions the pension fund. All of it; the benefits, the funding, and
responsibility for bad investment decisions. This is not just hypothetical.
There is a real world model to look at. I know from personal experience. That’s
the way it works for my private sector trade union, the plumbers and
pipefitters union.
We the membership decide how
much of our total pay package, negotiated with the contractors, goes into the
pension fund (as well as the health benefits fund, which the membership also
controls). If we want higher benefits, we vote a lower take-home pay to fund
it. If the fund’s investments tank, we either vote to add more money from our
paychecks, or cut benefits, or hire a new investment management. We can’t go
back to the contractors for more money. The total pay package is all there is.
There is no other money to be had. We have a contract, transparent for all to see.
To provide checks and balances and oversight, the board of trustees for the
funds is made up of both union representatives and contractor reps.
And it works. You’d be
surprised how responsible unions can be running their own funds when they
actually run the funds from start to finish. The membership funds it 100%. I
worked for 45 years (1967-2012) paying into the pension fund. I now collect a
decent monthly income. I don’t claim to know all of the issues that must be
resolved to pull off the transformation for the public sector unions. But we
should look to the private sector model as the way to go. The half-measure
discussed here looks to me to be worse than no reform.
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