New York City Comptroller John Liu
New York City – Government employees who oversee taxpayer-funded pension systems across North America heard fiery speeches Monday morning calling for battle against political enemies in defense of guaranteed retirement benefits.
“There is an extreme push to do away with defined-benefit plans. We’re being attacked,” said Pat McElligott, president of the National Conference on Public Employee Retirement Systems. “The only way we can stop this attack, is to start attacking them.”
McElligott, a former firefighter and representative of the Washington State pension fund, went off-script during his last speech opening a NCPERS conference as president. His successor will be elected during the five-day meeting.
He reminded the room full of public employees that they had made a decision to serve the public instead of making millions.
“What we have now is not something that was just given to us. It’s not overgenerous. It’s what we worked for to achieve retirement security,” McElligott said.
NCPERS is a trade association for more than 550 pension funds in the U.S. and Canada.
“The traditional pension – also known as the defined benefit retirement plan – has been, as just mentioned, under attack in this country since at least 1980,” New York City Comptroller John Liu said in the Monday morning keynote address.
“In the private sector, the percentage of workers participating in a traditional plan has plummeted from about 88 percent in 1975 to 24 percent in 2008,” Liu said. “More than 90 percent of public sector workers still have a traditional retirement plan. We have to make sure that continues.”
“Not only for the benefit of public employees. But for all workers,” he said.
Liu is New York City’s chief fiscal officer. In his role he oversees the city’s five pension funds.
McElligott said public employees do have friends in government, “but every so often our friends need to be reeducated.”
“I come from the state of Washington. We’re the number three pension in the country. We’re overfunded in most of our funds and we still have our friends – we have a Democratic governor, house and senate – and they’re still pushing defined contributions on us,” McElligott said. “This is just unheard of.”
“They lie to us and then they come back and ask us for our help again,” he said.
“When I talk about this issue, which I do pretty often, I like to compare it to a group of people standing in the rain, waiting for a bus,” Liu said. “The public sector workers are like the one person in the group that has an umbrella. Everybody else on the street corner is looking at that umbrella and getting very jealous.”
“We have a name for that in the retirement field,” he said. “We call it ‘pension envy.’”
“Last year the governor of Wisconsin took advantage of pension envy and went after public sector workers,” Liu said. “He exploited the resentment created by the worst economic crisis since the Great Depression and set private sector workers against public sector workers.”
“But the pensions of public sector workers are not why private sector workers are out there in the rain, getting soaked,” he said.
“But if only one person has an umbrella – and in this case, we’re talking about public-sector workers who have traditional pensions – does it make sense to take the umbrella away from that one person who has it? Or does it make sense to try to get an umbrella to everyone? I think the answer is obvious,” Liu said.
“We need to be motivated. We are public employees. We’re the ones filling potholes. We’re the ones driving the kids to school. We’re protecting their home,” McElligott said. “They think we’re overpaid until all of the sudden the electricity goes out and they’ve got some guy sitting on a pole in 20-degree weather trying to recharge that line so they can get warmth in their house. They don’t mind us then.”
“We need to get active. We need to get out there,” McElligott said.
“The way that pensions get discussed today is remarkably one-sided and short-sighted. It seems to be all about cost, with no consideration of need,” Liu said. “Taking pensions away from those who have them is not the answer.”
“However, there are ways in which public-employee pensions can be better managed,” Liu said.
He said the city still manages pensions in much the same way as it did 70 years ago.
He said his proposal of a centralized investment authority for all five New York City pension plans and other reforms will save $30 billion over 30 years. (In 2013, the city will spend $8 billion on its five pension funds, according to Liu.)
“And this could be done without reducing anybody’s benefits.”
Liu also talked about research done as part of his office’s Retirement Security NYC project.
- The city’s pension costs are projected to rise through 2060, but starting in 2016 they will begin to fall as a percentage of total city spending.
- City pension contributions grew from $1.2 billion in 2001 to $7.7 billion in 2010 because of poor market performance.
Liu also said the city’s funds will reduce their assumed rate of return from 8 percent to 7. Financial economists criticize pension funds for using high discount rates which distort the true cost of retirement benefits.
Correction: A previous version of this article misidentified the National Conference on Public Employee Retirement Systems.
It boils down to the apparent attitude that unionized public sector employees feel entitled to a pension system that will bankrupt the private sector… of which most won’t see any pension.