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

2 comments:

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.)