| Despite Montana's financial health overall being quite strong compared to other states, we face pretty significant unfunded liabilities in our public employee retirement systems -- one for state employees, one for teachers.
Interesting story today, forwarded to me by Eric Feaver, that focuses on a fairly small number of public employees with large pensions while downplaying the more typical numbers. The headline focuses on one retiree who gets over $100,000 from the system, but here's the real nut: However, for all retirees the mean was $16,484 in the PERS and $22,631 in the TRS and $12,238 for the median in the PERS and $22,546 in the TRS, according to the report. As Feaver notes, "That's hardly a king's ransom." There are some proposals floating around out there. One is simply to privatize the system, a move that won't address the liabilities of the current system (promises already made) and will simply push risk off on to retirees. We can do that, but we just need to be mindful that any savings that result come from just cutting compensation.
MEA-MFT is promoting a plan to require longer terms of work in the system to qualify for full retirement benefits and some other reforms to make the system work better. I'm not deeply familiar with them, but the state would be wise to work with these stakeholders, not beat up on them.
Separately, the larger question of socking away money (either through large public accounts or private individual accounts) in the stock market as a plan for retirement has its shortfalls. Check out this chart of the Dow Jones Industrial Average for the past decade to get a sense of just what might be problematic with relying on the stock market for perpetual growth.
Putting more money into a place that seems to be short on actual investment opportunities of late won't lead to growth. It will lead to more bubbles and more pain as people watch their portfolios collapse. I'm skeptical in general of the value of pushing more people in to 401Ks. Part of Social Security's good sense is to operate as a ponzi scheme that captures long-term productivity gains. We can't run all of our retirement operations like that, but we may need to run more of them. |
