The new Reason-Rupe national telephone poll of 1,003 adults finds 72 percent of Americans are concerned their state and local governments may not be able to afford the pensions that have been promised to government workers. With those worries in mind, 82 percent favor requiring current public employees to contribute more towards their own future pensions and benefits.
A majority of Americans, 53 percent, believe public employees should contribute at least 50 percent of the cost of their retirement benefits. Fifty-eight percent of Americans favor setting a cap on the maximum dollar amount of annual pension payments public workers can receive during retirement, while 35 percent oppose a cap on pension payments.
Sixty-seven percent of Americans favor shifting future public employees, those who haven’t been hired yet, from guaranteed defined-benefit pensions to 401(k)-style retirement accounts and 59 percent of Americans favor shifting current public employees to a 401(k)-style retirement system. However, only 38 percent of Americans support transitioning current public employees from guaranteed pensions to 401(k)-style retirement accounts if it means breaking a contract with existing workers. At the same time, 6 in 10 would favor such a transition if otherwise taxes would have to be raised or government services reduced.
Ultimately, sixty-six percent of Americans think shifting public employees from guaranteed pensions to 401(k)-style retirement accounts is a “good idea” because 401(k)-style accounts “give employees flexibility to take the plan with them from job to job and are less costly to taxpayers,” while 29 percent say such a reform is a “bad idea” because “benefits would not be guaranteed and would depend on how well the employees and governments saved and how the market performs.”
Trade-Offs in Pension Reform
Reason-Rupe posed a series of questions to gauge how Americans weigh specific aspects of the trade-offs that governments may be confronted with and it is clear Americans do not want to cut services or raise taxes to pay for public pensions.
Seventy-seven percent of Americans oppose reducing spending on services like education, health care and infrastructure so that the funding can be used to pay for public employee benefits at current levels. Similarly, 74 percent of Americans oppose raising property taxes, sales taxes or income taxes to fund a public pension shortfall.
But Americans don’t want to cut current workers’ or retirees’ benefits, unless they have to. Seventy-one percent oppose reducing pension benefits that are currently being paid to already-retired public employees, while 27 percent favor a reduction in benefits to these retirees. Fifty-three percent of Americans oppose reducing current public employees’ future pension benefits, while 44 percent favor reducing the pension benefits of current government employees who have not yet retired.
Nevertheless, when confronted with the hard choice of pension reforms or higher taxes, 81 percent of Americans say public employee contracts should be renegotiated to reduce pension benefits and current employees should contribute more to their own pensions, while 16 percent say taxes should be raised to fully fund public pensions at promised levels.
Likewise, when presented with the choice between cutting government services and pension reform, Americans choose the latter. Eight in 10 Americans favor renegotiating public employee contracts to reduce pension benefits and making current employees contribute more to their own pensions, while 15 percent favor reducing public services ranging from police and fire protection to recreation so that pensions can be maintained at current levels for past and present public employees.
Public Concern About Underfunded Pension Systems
Seventy-two percent of Americans are concerned that their local and state governments won’t be able to fund public employee pensions as currently promised. Thirty-nine percent are “very concerned”; 33 percent are “somewhat concerned”; 15 percent of Americans are “not too concerned”; and 11 percent are “not concerned at all” about government’s capacity to pay for public pensions.
Seventy-six percent of Americans think pension reform should be a priority for government: 35 percent say it should be a “top priority” and 41 percent say it should be an “important but lower priority.”
Nearly three-quarters of Americans, 74 percent, are concerned their local or state governments will raise taxes in order to pay for public employee pension obligations in the future. Forty-two percent are “very concerned” and 32 percent are “somewhat concerned.”
Despite the size of unfunded pension liabilities across the country, half of Americans say their local or state governments have not raised taxes or cut services nor have plans to do so to help pay for public pension costs. Roughly a quarter says their governments have raised taxes or reduced services or have plans to do so to help pay for pension costs, and another quarter say they don’t know.
Public Employees Favorability and Benefits
Half, 50 percent, of Americans approve of the job President Barack Obama is doing, while 44 percent disapprove. Just 23 percent of Americans approve of the job Congress is doing, while 69 percent disapprove.
A majority, 54 percent, of Americans has a favorable view of public employees (24 percent have a “strongly favorable” view and 30 percent have a “somewhat favorable” view), while 28 percent have a “neutral” view of public workers, nine percent have a “somewhat unfavorable” view, and five percent have a “strongly negative” view.
Regarding the retirement benefits public employees receive, 52 percent of Americans believe public employees receive better benefits than private sector workers in similar jobs, while 24 percent think public and private-sector worker benefits are about the same, and 19 percent believe government workers have worse benefits of those in similar positions in the private sector.
A strong majority of Americans, 78 percent, believes the public should get to vote on any increases to public employee pensions, while 20 percent say the public should not get to vote.
Retirement and health care benefits are highly valued by Americans. When considering whether to take a new job or stay at their existing job, 30 percent of Americans say benefits such as health care and 401(k) savings are the most important factor, followed by how interesting the work is (20 percent), earning the highest pay possible (17 percent), making a difference in society (13 percent), a pension (nine percent), and a flexible work schedule (seven percent).
When asked to choose, 65 percent of Americans would rather take a job with a lower salary but more health and retirement benefits, while 33 percent would rather take a job with a higher salary but fewer health and retirement benefits.
Kristen Kelley, Communications Specialist, Reason Foundation, (443) 722-5592
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