Echoing what the Peak has been writing for at least six months, Independence Institute’s Senior Fellow in Fiscal Policy, Barry Poulson, is now joining those who are sounding the alarm about the poor state of Colorado’s public employee retirement plan. From his recent op-ed to the Colorado Springs Gazette:
There is no other pension plan in the country that imposes such a financial burden on future taxpayers. Every household in Colorado would have to pay $1,739 more in taxes annually, just to meet pension obligations.
In states such as Colorado only a hard freeze will generate revenue savings in the pension plan. In a hard freeze all employees, including current employees, are required to enroll in a defined contribution plan; all future benefits in the defined benefit plan are terminated. The benefits already earned by current employees and retirees in the defined benefit plan are fully funded, and Social Security benefits are extended to all employees.
This is true, Algernon, except when one of the parties has the power of coercion and the ability to make good on the contract only with other people's money. I for one, would never have voluntarily choosen to be party to this contract. Majoritarian rule has it's drawbacks too.
By definition, all of the parties to a contract believe the terms of the contract to be "fair." Otherwise, they would not choose to become parties to the contract.
Defined contributions, not defined benefits. It's the only fair way to determine who pays, for how long, and to what standard.
Sadly, FPPA is not a lot better. The actuarial studies use that same absurd 8% return on investment assumption.
According to Morningstar, Colorado's public pension debt is "moderate." “In Colorado, which does not contribute to teachers' plans, the gap for each taxpayer is moderate at $1,804 despite a low funded ratio of 57.7 percent. Morningstar notes that the fact that teachers' liabilities are not covered by the plan does not mean that Colorado taxpayers are not ultimately liable for the funding.” I am proud of Poulson for recognizing that public pension benefits are inviolate contractual obligations of sponsor governments.
Call up Hickenlooper and have him focus like a laser on gay marriage. This will fix this problem–period.
And we'd better not let anyone touch FPPA
FPPA members, watch this closely: PERA would love to merge with FPPA to get their hands on our money.