Moral Duty vs. Fiscal Responsibility
Reader comment on: Underfunded State Pension Plans
Submitted by Ronaldo (United States), Oct 14, 2010 13:25
The moral duty that out society has for these public servants is clear. These people worked 20, 30, or 40 years with the promise that upon retirement they would receive a pension with an expected monthly payout. Yet the fiscal reality is that there is not enough money to go around. So the options available are roughly:
A. Increase taxes on all tax payers
B. Decrease payouts to retirees
C. Increase retirement age
My general feeling is that since these pensions benefit a portion of society, the costs should be carried by those people who benefit the most. Perhaps the pension fund managers can come up with a system where the total pay received by a public servant during their working career, is compared the total received to date.
For example: a 40 year old former cop worked 20 years and during his career earned $1,200,000. ($60,000 per year times 20 years). Their retirement package is often determined by the last couple of years on the job so their yearly benefit could be $100,000. So now at the age of 60 this former cop has received about $2,000,000. I would argue that when the the pension benefit comes close to or exceeds the pay that was received during the working years then society's obligation to the former public employee is less.
Here is a silly analogy: a friend of mine bought a pair of Rockport leather sandals. He is a real outdoorsman, kayaker, and every year his outdoor and water activities would wreck those sandals. The Rockport store in Newport, RI had a lifetime warranty on their sandals. So at the beginning of each summer season he would bring in the old battered sandals and get them replaced with new ones. He replaced his sandals at least five or six years in a row. There is something disproportionate about this benefit that doesn't sit right.
I think the fiscal well being for America will be significantly less in comparison to what it was at the time these pensions were promised. Therefore I think there should be a reassessment of these benefits and that there should be some proportionality to the benefits received. And I further argue that any costs should be carried by those who have most benefited from the pensions.
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