Pension Reform across the U.S. and in the Golden State

Who came up with the ludicrous notion that people should be paid for not working?

Come to think of it, the idea seems innate in human nature. Who doesn't want to get paid to do nothing?

Hence, the pension system. Work thirty odd years, retire with a gold watch and the warm wished of friends and colleagues, and at the end of every month, collect a pension. Get paid to sit at home and watch TV.

Madness! What's worse, though, is who is footing the bill for this long-term laziness. In public employee firms, the tax-payers are on the hook for paying the vast bulk of the pension demand. Entire cities have had to lay off works, cancel services, in short, give up providing the basic services which cities are expected to give. These pension obligations are simply outrageous. It is crime, a sin for the old to cannibalize the young.

When Wisconsin Governor Walker proposed taking way the bargaining rights of public employees in order to help balance the budget and limit future obligations, he was met with a firestorm of protest from unions across the state. His actions, however, will enable to forgo issuing massive layoff notices. New Jersey Governor Chris Christie negotiated a deal where the state employees will have to contribute more toward their retirement. Christie acknowledged that the union hate the deal now, but they will be thanking him ten years later, because at least they will still have a pension to draw from upon retirement.

California faces the same crisis, an unsustainable pension system in the face of a larger number of retiring workers, with the alarming prospect of fewer new hires to fund the badly-underfunded pension system.

Three proposals listed by the LA Times ("Calif. GOP presses pension reform" 3/18/2011):
1) State employees must have accrued more years in the system before they can be eligible for pension benefits
2) cut benefits for current and future employees
3) Limit the salary to calculate pension benefits at $90,000

Public Employees in the City of Torrance have stepped up and agreed to contributed more to their pensions before they retire, lessening the fiscal impact to the city and to taxpayers. These changes will only affect new hires.

These moves by the state of California are insufficient. There will still be pension obligations. It will not put an end to this immoral system, which must be curbed and phased out entirely.

The City of Costa Mesa has developed a meaningful plan to curb the long-term burden posed by public employee pensions: lay of city workers en masse and contract out the services to private firms. Despite the LA Times reporting the suicide of one public worker in the aftermath of the layoff notices, the city must move ahead on limiting its financial obligations, not just for the sake of the city, but its future stability. Let private companies decide how to compensate workers, paying with their own funds. Tax-payer money must fund public works and public service, not private pensions.


I understand that the political machinations of solving pension problems is so protracted that a complete devolution and removal of the system is impossible. But lawmakers across the country, legislators in the Golden State, have got to make the tough decision to effect real reform. Governor Walker did it. Governor Kasich of Ohio took the same bold steps. Governor Christie has made it clear: "The day of reckoning is here." Federal and state governments have to deal with the budget-busting pension liabilities.

Ideally, the whole practice would be undone entirely. In reality, any significant steps to return the burden on individual workers and private firms is better than nothing.