Got a common sense solution to these big pension deficits?
Most of us are not actuaries. But we can understand when major liabilities are bearing down on us.
AJC reporter Russell Grantham writes that the state’s two largest pension plans — the Teachers Retirement System and the Employees’ Retirement System — were under water by at least $10 billion in 2009.
Remember, these are legal commitments made by Georgia to employees who expect them to be honored in good faith.
The state has tried to do something. Grantham reports that the Employees’ Retirement System radically changed the game for new hires as of 2009: They will receive a much smaller pension — half of what their older co-workers will get — and be enrolled in a 401(k)-style retirement plan.
The teachers plan, meanwhile, changed its rules so the state can cut its contribution to the fund when times are bad, as long as it catches up when the market recovers, Grantham reports.
Still, the shortfalls are stratospheric, Grantham writes. Senate Retirement Chairman Tim Golden, R-Valdosta, said the Teachers Retirement System is paying out about $3 billion a year in benefits — nearly twice as much as the state and other contributors are pumping into the pension fund.
For example, Grantham says former House Speaker Newt Gingrich is suggesting a change to federal law that would enable the states to declare bankruptcy, if necessary, to get out from under their pension obligations.
But that would break a promise to employees — many of whom traded higher wage increases for better pensions years ago.
What do you think?
- Henry Unger, The Biz Beat
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