When we last checked in on public-sector pensions, things were not going so well. For current and future taxpayers, that is, who are on the hook for big bucks and big obligations. For public employees, things are going pretty swell, as this Cincinnati Enquirer article makes clear.
Retirement incomes for the most experienced government employees top out at 88 percent of their active-duty pay. Unlike most private-sector workers, whose retirement is driven by the strength of the stock market and their 401-k plans, the pensions for government employees are guaranteed.
In addition to higher average retirement incomes, government retirees in Ohio also enjoy government-sponsored health care, can retire as young as 48 for police and firefighters, and have the opportunity to 'retire' and collect a full pension while going back to work, often at full pay for doing the same job. Such 'double-dippers' were paid more than $741 million by the State Teachers Retirement System last year and $240 million by the Public Employees Retirement System, records show.
In Toledo, even the mayor is a double-dipper.
Since starting his current term in January 2006, Toledo Mayor Carty Finkbeiner has drawn his annual salary of $136,000 in addition to a state pension for more than two decades in elected and unelected positions. He is leaving office on Monday.
And because he is already receiving a Public Employees Retirement System pension, Toledo taxpayers have paid $75,221 into an annuity as an additional retirement fund for Finkbeiner.
Having no knowledge of Carty Finkbeiner until reading this article, I take no position on his contribution to the great state of Ohio, whose public-sector pension issues are absolutely representative of everywhere else in the nation. But as a taxpaying resident of the Buckeye State, I do take a position on his double-dipping and the robust payouts to public-sector employees, especially double-dippers (which I know is legal in many instances). Ohio government at all levels has not fully funded its pensions, meaning that either public-sector retirees gets a growing share of my income until I die or the "guaranteed" retirement for public-sector employees gets cut, just like it gets cut in the private sector. The public sector at all levels should be switched to defined-contribution plans immediately (this is happening in the private sector for all sorts of reasons, the historical inability and/or unwillingness of companies to fully fund pensions on an ongoing basis being part of the problem). This is already happening in many parts of the public sector (Ohio's teachers plan, for instance, switched at least partly to such a system a decade ago) and it should go full steam ahead, if only to make it easier to account for future liabilities.
The Enquirer reports further
The pension cost to local governments in Ohio now stands at $4.1 billion a year. If current trends continue, the pension costs will grow by $604 million to $768 million during the next five years, according to a Columbus Dispatch computer analysis. The costs are directly related to the size of government payrolls.
One of the old arguments about lavish (relative to the private sector) retirement benefits for public-sector employees was that they were simply getting deferred compensation, that they might have job security, but they got paid less during their careers, so good retirement benefits were the payoff. This is no longer true, with the average public-sector worker making about $71,000 and the average private-sector drone pulling only $40,000 nationally. Plus great job security, more days off, generally sweeter health-care coverage, etc.
And then get ready to take a stand against giving up even more of your money to pay for lavish retirement benefits for people who already make more than you do.
Buy the new issue of Reason, whose cover story on "Class War: How Public Servants Became Our Masters" is directly on point. Available at newsstands everywhere. And just subscribe already. A year costs less than $20 a year.
Update: In the comments below, Citizen Nothing helpfully sends a link to the Columbus Dispatch's truly enraging summary of public-sector retirement packages in Ohio, which is a representative stand-in for every state in the Union.