Monday, March 02, 2009

Nationwide defined benefit are causing problems

The MRJ offers this piece on the future of government-funded pension plans nationwide:

Is it a "blip" or a serious problem?...

State and local pension plans support about 27 million Americans but have lost, on average, about a fifth of their value over the course of the past year

My intention is for the Town to stop offering defined benefit plans to future non-union employees, while continuing to offer defined contribution plans. That would slow the growth of the Town's pension liability and pension deficit (probably $20,000,000 by now). This is because defined contribution plans are funded annually... unlike defined benefit plans for which funding may not happen for decades.

Tim White


Anonymous said...

Why should non-union employees be treated differently?

tim white said...

Because there's no need to build any consensus with (future) non-union ee's.

Collective bargaining would be involved with both current and future union ee's.

And with current non-union ee's, you'd need to (or you should) discuss changes to benefits.

(IMO, the same concept applies to current union ee's - discussion of such significant changes is really necessary... it's best to get buy-in from people... but with regard to future ee's... they would simply know the offer before they accept an offer.)