Public Employee Press

Editorial
More right-wing pension noise

After all 50 states and Puerto Rico in recent years introduced changes in their pension plans, the conservative Manhattan Institute continues its campaign to gut the retirement security of public service workers.

“The Limits of Retrenchment: The Politics of Pension Reform,” which the institute released in September, describes the so-called reforms as inadequate.

“Most of the changes apply only to new hires, not to existing employees or those already in retirement,” the report says. “Therefore, the savings from these plans will take decades to materialize.”

The Manhattan Institute’s analysis appears to be more political and ideological than factual. That’s not surprising, of course, since it has a long history of bashing public employees.

The pension changes enacted by states and municipalities are forcing public workers to take a big financial hit even though the pension shortfalls largely resulted from the 2008 financial crisis and the failure of governments to meet their contribution obligations. Workers now must generally contribute more and put in more years for a less rich benefit.

The Manhattan Institute’s claim that the pension changes are not far-reaching enough to ensure the long-term health of the pension systems is by no means certain.

A Center for Retirement Research at Boston College report found that “for most plans, the reforms fully offset or more than offset the impact of the financial crisis on the sponsors’ costs.” The study examined 32 plans in 15 states, and it concluded that, “pension costs as a share of state-local budgets are projected to eventually fall below pre-crisis levels.”

The Manhattan Institute’s agenda includes encouraging states and municipalities to abandon defined benefit pension plans (like ours), which ensure workers receive a guaranteed benefit based on their years of service and salary. Instead, the think tank wants employers to offer 401(k)-like defined contribution benefits, which transfer the investment risk from them to their employees. Studies show that the 401(k) experiment has failed as account holders have been unable to save enough for a decent retirement.

Based on our reading, we believe the Manhattan Institute’s anti-worker report belongs in the dustbin.