The Myth of the "Generous" Public Pension System

After a lifetime of hard work, don't we all deserve to retire with dignity?

Can we put a moratorium on the use of the phrase "generous public pensions"?

Lawmakers are using the phrase at every turn, implying that America's public employees are retiring in riches and burdening the economy. The former nurses, school employees, college professors and child protection workers who are currently averaging less than $23,000 a year in benefits would probably beg to differ.

Instead of arguing about how "generous" it is to let public servants retire with dignity, we should be working together to deliver retirement security to all people.

Last week, the Santa Cruz Sentinel ran a story on the dilemma over county pension costs, part of a wider statewide budget problem familiar to many states across the country. The paper's own assessment of county pensions found that the median local government worker earns an annual pension of $18,539 -- hardly a king's ransom.

The few retired public employees making 6-figure pensions are almost always top executives like city managers or fire or police chiefs who made 6-figure salaries. Santa Cruz's former city manager, for example, retired with a $200,000+ pension after earning that much while employed for 31 years.

The truth is, most public pension systems allow for secure but modest retirement benefits to ensure our nation's retirees stay out of poverty.

Here's how pensions work: Most public employees earn the right to traditional retirement plans after working a minimum number of years of service (usually at least five). Employees pay a percentage of their salary into these Defined Benefit Plans, which are then invested, on the assumption that they will receive a guaranteed amount to get by in retirement. Public employers also commit to fund a portion of these pensions, but all too often governments do not hold up their end of the bargain.

Only 27% of the money that goes into public employees' pensions comes from state and local government contributions, but the repeated failure to make those required contributions, along with the investment losses caused by the Great Recession, is what's causing the lion's share of shortfalls in public pension funds.

The thousands of public servants who have dedicated their careers to providing services to the elderly, teaching children, and protecting our communities for little pay are not to blame for problems in pension funds. Retirement costs represent a very small fraction of a state or local budget, and working families are already making their share of sacrifices to solve budget problems. If we need to cut costs further, let's eliminate the waste, fraud and sweetheart deals for government contractors and tax cuts for corporations instead of making drastic pension changes that will leave our retirees in the dust.