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Benefit Crisis in the Public Sector
All across the United States, government workers at the state, county and municipal levels are being confronted with threats to their retirement security. At the same time, the always difficult problem of maintaining quality health care benefits will face additional challenges as governments of all sizes are forced to recognize the costs of promising health care to future retirees.
A report issued by the Pew Center on the States on February 18, 2010, details a "$1 Trillion Gap" between the retirement benefits that states have promised to their employees and the funds they have on hand to meet those obligations. This problem has worsened with the stock market downturn and the Great Recession since 2008. But the problem is rooted in the fact that many states have not met their obligation each year to contribute sufficient funds to support the benefits their employees earned in that year. Meanwhile, employees in most jurisdictions contribute significant portions of every paycheck to help fund their benefits.
Even though pension funding has been inadequate in many states, the reality is that liabilities do not come due all at once. There is still time to make up for past under-funding.
The Pew Center report notes that fully half of the trillion dollar shortfall they cite comes from the obligation to provide postretirement benefits other than pensions – primarily health care. These liabilities are, of course, affected by the need for reform in the nation's health care system. In most states, these benefit promises have not been pre-funded. But, just as with pensions, these benefit costs are paid out over time. They can be addressed in future years.
Political pressure is growing in many states to restrict the growth of employee benefits by changing from defined benefit to defined contribution plan designs and other benefit slashing approaches. A defined contribution plan places the responsibility for managing pension funds on individual employees where their futures will be dependent on their skill - or luck - in the investment market.
State by state, proposals to change to pension plans are driven by anti-tax activists with ties to national conservative organizations. These are the same people that have orchestrated the movement to cut taxes and starve government at all levels, hamstringing the public sector and denigrating its image of effectiveness with residents and citizens.
The fight to protect public sector retirement security is a critical one. We cannot win this battle unless we educate and involve every CWA member in the public sector. However, if we mobilize all workers, public and private, to support the struggle for retirement security of all workers, it will bring strength to a broader effort to protect benefits in all sectors.
This website will provide information to all CWA members on the public sector pension crisis. It will be updated regularly with news and analysis to keep our union informed and ready for this fight.