“It’s simple; since the employees themselves in government rarely put their own money toward the pensions it’s all a future promise to pay. So don’t and say ‘tough luck’.”
I disagree. From an economic perspective in a free labor market, an employee enters into a contract with an employer (public or private) to exchange his/her labor for a compensation package which includes cash, non cash, and benefits. An employer may offer generous retirement benefits in the future in exchange for lower cash compensation today. Essentially public pension are no different than the fully funded defined benefit pensions many private sector organizations provided employees.
When a public or private firm reneges on pension payouts, or reduces them, the firm is essentially stealing from the employee. The employee performed the work at a point in time for wages and the promise of future retirement benefits. The obligation of the employee has been met, if the firm does not provide the promised benefits at a future date it is breaking a contract and stealing the value of the labor represented by the benefits not paid.
The employee is not at fault because the organization to which he/she contracted labor did not put aside the funds to pay out the benefit at the future promised date. The employee is also not at fault if the organization made a bad contract (i.e. the total value of the compensation package for which the employee contracted was greater than market value) just as the employer is not at fault if an employee accepts a below market compensation package for a job. The contract is between the organization and the individual and should be inviolate from the point of both parties. Regardless of future circumstances, the employer owes the deferred compensation and benefits for which the employee contracted at the time he/she performed the work.
Free markets require contracts to operate efficiently. To say a firm or government agency can simply say “tough luck” to employees who have performed work in exchange for compensation that has not been paid is no different than an individual contracting a five year car loan with a bank, paying the loan for two years, and then telling the bank “tough luck” for the other three years. Any court in the land would consider such action breach of contract and the failure of the car purchaser to surrender the car would be consider theft.
Citizens of communities with underfunded pension plans elected representatives who chose not to fund the plans in the past through taxes or spending cuts. The voters who elected these representatives are ultimately accountable for the actions of the representatives, including the failure to set aside funds. The work was performed by employees resulting in an obligation for the employer to fulfill its contract to pay compensation according to the terms agreed to by both parties when the employee performed the work. The voters are obligated pay for the decisions they made in the past, and benefited from, by fulfilling the pension contracts and either pay higher taxes or accept a lower level of government services. To do otherwise would say contracts have no meaning, theft is permissible, and there is no free market.
This is not a free labor market. It is a government mandated market. The beneficiary of this mandate drives the decision making. The promises were given to themselves by themselves.
That describes the state of the US in 2014 - See what the Federal Government did to the Delphi pensioners and GM bond holders.
The difference is the public sector is using taxpayer money. And no private company sets up benefit defined pensions and if a big one does it is highly regulated by government.
I don’t believe public sector employees should be treated better and get large, lifetime pensions more and more in fraudulant ways like padding their final years with untaken sick time, etc. (the private sector normally doesn’t carry sick time over from year to year) and then double dipping with a job in another agency.
Frankly, the voters aren’t very aware of how much of their taxes go to this stuff and the government sure doesn’t tell them. It’s not the free market when public employees are involved. It’s a legislative matter and as we saw in Wisconsin they throw a hissy fit when you try and reform this outrageous waste of tax money.
For the private sector I fully agree with you. The public sector, except for maybe cops, firefighters, and emergency workers can go pound sand as far as I’m concerned.
I disagree with your comparison to the private sector. First off there is virtually no private sector union. Secondly very few of us in the private sector have a contract.
My benefits (medical and retirement) have been changed multiple times in my lifetime with little to no compensation in return. For instance my pension was changed to a 401k, it was simply rolled over and the pension was eliminated. My healthcare plan went from 0$ contribution to thousand $ a year with reductions in coverage. Again no compensation for the change.
Furthermore I did not campaign, fund or elect by boss who controls my benefits and pay.
Please stop comparing the private sector to the public. There is no comparison. The public sector is organized crime which requires the private sector to pay protection money or face consequences.
You forgot to mention that the public employee campaigned funded and elected the very people who control their pay and benefits. I would call this putting the fox in charge of the henhouse. So in the end the public employee squandered their own pension by electing these patsies. Tough luck.
All defined pension plans, private and public, are promises to pay. I think both should be treated equally under the Pension Benefit Guarantee Act. All entities that make such promise should be required to pay into the fund that under rights the act. When an entity, private or public, is judged to be insolvent the benefits are reduced and capped. Public entities should not be exempt because governments can theoretically always raise tax levels to pay benefits. They should be allowed to file for bankruptcy and have their financial condition assessed at then current tax rates.
That is correct. However, tell that to the GM senior bondholders who should have been paid first when the O regime came in. Contracts can and have been broken. Frequently, via bankruptcy -- occasionally, by a court.
“Citizens of communities with underfunded pension plans elected representatives who chose not to fund the plans in the past through taxes or spending cuts. The voters who elected these representatives are ultimately accountable for the actions of the representatives, including the failure to set aside funds. The work was performed by employees resulting in an obligation for the employer to fulfill its contract to pay compensation according to the terms agreed to by both parties when the employee performed the work. The voters are obligated pay for the decisions they made in the past, and benefited from, by fulfilling the pension contracts and either pay higher taxes or accept a lower level of government services. To do otherwise would say contracts have no meaning, theft is permissible, and there is no free market.”
yours is the most intelligent description of the problem I have seen. I hope you have your asbestos suit on
. There are a fair number of FReepers who were burned by the decisions of politicians to “kick the can down the road” by not funding the pension contributions when they were due.
I have come to despise politicians. It seems they get co-opted right after they get reelected