The Next Genius Idea About Private Pensions: Let's Hand 'em Over to the States!
Just when you thought they couldn't think up anything worse:
As growing numbers of baby boomers face retirement with inadequate savings, some state officials are considering a novel proposal to rebuild America's ailing retirement system — having state pension funds run retirement plans for companies.
Because more companies are ditching their own pension plans or not offering retirement benefits at all, the idea would be to give companies an easy way to offer a firm pension without having to run the plan themselves.
On Monday, the labor economist Teresa Ghilarducci, who developed the proposal, held a public forum at the New School for Social Research with New York City's comptroller, John Liu. […]
[Liu] said that more elderly people were turning up in the city's homeless shelters and that a program to make it easy for employers to offer better retirement benefits might reduce future strain. Lawmakers in Connecticut and California have introduced bills to either study or create such a program and the Pennsylvania state Treasurer has expressed interest[.]
In paragraph 7 of the New York Times story, we get the first hint that this might not be such a swell idea. You will especially enjoy the scare-quotes:
But the idea could be controversial, because the role of managing the money would fall to state pension systems, now under fire in many places for their handling of city and state workers' pensions. Republicans have tended to see the idea as one more manifestation of "big government."
State pensions are underperforming, over-promising, and catastrophically under-funded. Read all about it in our February 2009 cover story "The Next Catastrophe," and in columnist Veronique de Rugy's April 2011 piece on "The State Pension Time Bomb."
