Taxpayers have been long bamboozled into making generous commitments to the retirement systems of public service workers. All over the country, in all levels of federal and state governments, these defined benefit plan pension plans have proven to be vastly untenable. To sustain the plans in their current arrangements and cover the obligations that have already been promised, the rest of society will be compelled to contribute to the retirement of those public service workers via higher taxes. This is turn makes the rest of the populace poorer — because their hard-earned money is being levied to the promised public pensioner, and not available to be saved for themselves.
The grand scheme is becoming unhinged. One must realize that the more people continue to buy into the idea that they are supposed to “retire at 65”, the more they are suckered into continuing to make their retirement years poorer and subsequently make the retirement years of public service employees richer. People see a public service worker being able to retire at that age and they think, “I should be able to also do so”. This idea needs to change.
There are two reasons why most people think that such pension programs are still sustainable and normal: 1) the exorbitant pension costs are buried in the category of “education costs” which allow advocates to falsely argue that higher education costs mean better education, and 2)the costs are largely buried in the larger budget process of federal/state/local governments (and how many people pay attention?).
In the private sector, costs are held in check by the fact that out-of-control costs make the overall cost of the product too high in the marketplace, and will bring the company down. The employees negotiate with company officials who are responsible to a board of directors and shareholders who need to provide a competitive product. But in the public sector, with no competition, costs become whatever the public sector unions can squeeze out of the elected officials who they have helped elect, and who are more accountable to them than to the taxpayers who pay the bill.
The costs to keep public employee pension plans afloat are borne by all the rest of society — the taxpayers. This arrangement enables a small group of people to be paid a sizeable and continuous pension until death. It is not out of the ordinary anymore for a person to receive $65K- $100K for the rest of his or her life. But the actuarial cost to provide that promised benefit is astronomical, and unfair to hard-working private sector employees.