Sunday, November 27, 2005

Public pensions vs. the general welfare

The L.A. Times ran an interesting piece today entitled, “Pension Gap to Force O.C. Budget Cuts.” In it, there were two main points the leapt out at me: 1) increasing public sector retirement benefits are cutting real services ($84 million this coming year in O.C.); 2) the assumed rate of return for the County’s retirement fund of 7.5% was called too low by the government union chiefs.

Allowing retirement at age 50 with 75% of pay is questionable, especially given today’s expected life spans. Because of this kind of benefit, retirements are soaring in O.C. Meanwhile, O.C.’s pension fund obligations are only 69% funded.

As for the 7.5% rate of return criticized by Nick Berardino, general manager of the Orange County Employees Association, does anyone else find that a tad ironic given that Social Security’s rate of return is 0.7% and that these same unions team up with the Democrats to attack President Bush’s plan to allow some private retirement accounts that might earn as much as 6.8% in equities? Consistency in logic was never a requirement in a political fight.

One question, with soaring public sector retirement benefits resulting in budget cuts for education, health, and welfare: what’s a conservative to do? To a certain degree, it might be less harmful to society overall if we all simply paid government workers to retire rather than run our lives for us. In this case, we can be thankful that we don’t get all the government we pay for!