“…WORKIN’ FOR THE MAN EVERY NIGHT AND DAY”

8/24/08

Below is a letter I wrote to our local paper in response to an article on public sector pensions. See my 11/16/07 post, in which I related this issue to the Drew Peterson case.

Thanks.

Mark


8/24/08

The headline article by Mike Mitchell in the 8/24 Naperville Sun asks “Can cities afford to keep pensions?” The answer is “No,” but for reasons only hinted at in the article.

In its lead sentence, the article states “While many (emphasis mine) employees in the private sector sock away part of their incomes in 401(k)s and IRAs for retirement, full-time government employees can bank on a pension that is guaranteed to support them for the rest of their lives.” This contention understates the case. Not many, but, rather, most (soon to be almost all) private sector employees no longer have access to defined benefit (“DB”) plans. Therein lies the reason that cities, and other state and local governmental bodies, can no longer afford to keep their rich pension systems. While no one likes paying taxes, perhaps especially property taxes, taxpayers tolerated the huge chunk of their taxes that went toward pensions back when those taxpayers were getting pensions themselves. Now that the DB plan has gone the way of the dodo bird in the private sector, taxpayers have very little tolerance for the even larger, and growing, portion of their taxes going toward paying a benefit that they have no hope of receiving.

It is political will, rather than a cold calculation of debits and credits, that will render generous public pension systems untenable in the near future.


Mark Quinn
Naperville