Monday, February 25, 2013

The State and Metro should end guaranteed pension plans

Guaranteed State Pensions Could Become Thing of the Past
Monday, February 25th, 2013, by Blake Farmer, WPLN-  The Tennessee Secretary of the Treasury has a plan to change the state pension system. The traditional state pension would begin to be phased out under a plan to be presented to state lawmakers Monday. The state treasurer is trying to move away from guaranteed retirement benefits. In recent decades, the rap on state jobs is that the pay may be less than the private sector, but the benefits are good – especially the retirement plan.
This is a welcome move. Almost no one in the private sector gets a pension anymore. Pensions are nearly bankrupting cities and states across the nation. The State should end guaranteed pensions and so should Metro. The guaranteed pension should be replaced by a system of matched 401K contributions or a similar program.

Unfortunately, even if the employer match is a one-to-one match, there will be some people who will foolishly leave the money on the table. If they do, that is their choice and they should live with the consequences.

Serving in my capacity as a counselor to people in crisis, I see people who choose to not join a 401K program with a generous employer match.  They never have learned delayed gratification. They don't think beyond the present moment. I also see people who do stupid things like getting thirty-year mortgages five years before they retire, knowing their mortgage will be almost as much as their retirement income.  Some people are just irresponsible and do stupid things. We can only go so far in looking out for stupid people. People should plan for their own retirement. There is a difference between experiencing a crisis that is beyond your control and just being irresponsible. Social Security is safety net enough. Beyond that, we should encourage people to be responsible for their own retirement. An employee match is a nice benefit; a guaranteed retirement is too generous a benefit that we can no longer afford.

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1 comment:

  1. The pension plan is one of the benefits that state employees deserve to keep, especially considering that many state employees make extemely low pay. Many employees receive low enough pay to qualify for WIC, food stamps, and other income based assistance programs. I'm talking about educated people with Bachelor's Degrees or higher making $25,000 a year! You can't pay these people low salaries and then take away their pension plans also! If pension plans are dissolved, the state needs to restructure the pay scales and pay people at least living wages. Give me a break! This pension is sold as a "benefit" when you work for the state of TN. Many people justify accepting lower annual wages knowing that their retirement beneifts are secure. So what's the plan now..Pay State of TN employees ridiculously low wages AND offer them no retirement security? Can't wait to see what type of people are willing to take those jobs! We will be scraping the bottom of the barrel!