The new year brings a new start in politics: new state legislative sessions, new candidates running for office, and new ballot measures being proposed. 2016 is also an election year, which means people all across the country will be talking about how best to provide retirement security for public employees.
Ever since the depths of the Great Recession, anti-pension ideologues have been pushing harsh cuts to retirement security for teachers, firefighters, and other public employees. They do this under the guise of allegedly cost-saving “pension reform” even though the reality is their proposals increase costs for taxpayers and weaken retirement security for workers. In two big states though, momentum for making drastic changes to pensions is waning.
In California, long-time anti-pension politicians Carl DeMaio and Chuck Reed are seeing their efforts flounder. The state Public Employee Relations Board recently struck down the anti-pension ballot measure that DeMaio championed in San Diego. And the city of San Jose recently came to an agreement with police officers there to undo Reed’s harsh anti-pension plans. Furthermore, early opinion polling shows dismal public support for both of the anti-pension ballot measures they are championing this year.
In New Jersey, State Senate President Stephen Sweeney has proposed a constitutional amendment that would require New Jersey to make quarterly pension payments. This would be a good deal for taxpayers because the longer New Jersey goes without making its pension payments, the larger those payments become. Any pension payment the state skips now, they will have to pay later, so it has a cumulative effect. Also, New Jersey is not earning investment returns when it is not contributing money to the system; making quarterly pension payments would allow New Jersey to earn greater investment returns. This proposed amendment by Senate President Sweeney also shows a commitment to dealing with the problem of NJ’s underfunded pensions, unlike Governor Chris Christie who refuses to follow his own law while the unfunded pension liability grows.
These developments are in line with a recent trend of positive news for pensions. Funding levels for public pension plans continue to improve. More research confirms the superiority of defined benefit plans over defined contribution 401(k)-style plans. Let’s hope that in 2016 the false promise of “pension reform” is put to rest for good.