Public pensions: a troubling subject
From Harold W. Rippe,
This letter is in reference to Minnesota governmentsí public employees unions such as PERA, MSRP, and TRA, etc. and their retirement pensions. These unions are on the brink of filing bankruptcies, mainly because they canít sustain the payouts ordered by their board of directors elected by fellow union members. One union pension fund is short by an estimated $50 billion. Union bosses of the unions some years ago decided on an 8 percent yearly (one year it was an 8 percent bump in January and an 11 percent kicker in June) increase to each retiree, which results in the doubling every nine years of each monthly check for the life of the member or surviving spouse. In only a few short years, a beginning or starter pension of $1,600 a month could grow up to a $10,000 monthly payment with a 8 percent higher monthly payment forever. Considerably more than the monthly salary while working. The union retirement pension board, weíre told, canít find the funds needed for this doubling of payouts and unless they come up with more money, the program will become bankrupt. If that happens, state statute states that all Minnesotans that pay state income tax will be forced into extra taxation to balance the union pension fund.
In the DFL strongholds of Minneapolis, St. Paul and Duluth this policy of taxpayers refinancing union pension funds has been put in place and up and running for some years.
Private unions, like the CIO, AFL, etc., do a much better job with their retirement planning. I have never heard these unions asking for public money to bail out their pensions.Not only that, they are welcome, as far as I am concerned, to pay out any sum of money each month to each one of their members that they wish. After all, it is their money, not the publicís money.
The public unionís answer to making their pension plans financially healthy is to ask all the DFL senators and representatives (governor too) who were elected into the majority control with the help of money given to them by the union members, to answer their call and refinance their bent or broken pension programs.
One plan the DFLers came up with is to add a $5 tax or fee surcharge to insurance policies sold yearly to over 5,342,621 Minnesotans to make their pension payouts float above water and permitting the union bosses to keep adding an 8 percent increase to each memberís monthly check forever. A example of how unfair or repressive this idea is: A Minnesota worker earning the minimum salary of $10,500 a year would have to dig up or find at least $10 (fire and auto ins. policy to fund the pensions. When the DFLers pass this bill and the governor signs it, these unions will get about $50 million a year, nowhere near the $50 to $100 billion that they have to have to balance the underwater pensions. I estimate the DFLers will have to ask all us Minnesotans for at least a $75 tax on each insurance policy, each year, in order to even come close to balancing the public pension program in the next 10 years.
There are only one or two other ways to make their books balance. First, all union members (working and retired) could be assessed a certain amount, so that this yearly 8 percent increase can be sustained, (remember, Minnesotans originally paid about 50 percent of the pension funding, as we still do with all new employees). Second, perhaps the union would enforce membership to accept a much smaller yearly increase, like those of us on social security. Take my Social Security pension that I paid into for 50 years, in order for my Social Security pension to double I would have to live to be 105. Iím not going to make it.
I believe it is fine and dandy if unions can double, even triple their membershipsí pensions every nine years. More power to them. They should do it on their own, however. I donít like the idea of taxing the public if and when they run out of money. It does not seem unfair to me.
When President George W. Bush and Congress (with bipartisan support) suggested that social security could be improved by providing a higher yearly percent of increase (nowhere close to 8 percent) with better, smarter investing, unlike the unions have done, the Democrats were most adamant against it and wouldnít even bend an ear to listen. They were so in fear that a higher payment couldnít be sustained and that all Americans (including the union membership) would have to ante up enough of their hard-earned money to make it work. No way do they believe what is good for the goose, could be good for the gander. Improving the amount of money the old folks could receive monthly, like the union members receive, was thrown down into the dirt-covered cellar basement, all covered up, not to be seen.
Yet, here in Minnesota for all the union members that put their fellow people in office, not a word directed to them about their mis-management of their retirement accounting policies or ability to balance the books other than, so what, who cares? The Minnesota working people have to make up the difference or short-comings anyway. The Democrats were so proud of that procedure they wrote a statute to enforce it.
Editorís note: Harold Rippe wrote this letter before the Minnesota House passed a government pension bailout bill. To date, it has not passed in the Senate.