Some 350 years ago, when Sir Isaac Newton was recognized for his life's work in science, he said, “If I can see farther, it is only because I stand on the shoulders of giants.” In this simple statement, Mr. Newton eloquently expressed both humility and wisdom. Although he was a scientist of monumental talent and consequence, Sir Isaac knew that the work of his predecessors and his peers played a role in enabling his accomplishments. His astute and humble observation has relevance to the public pension community: we, too, stand on the shoulders of those who precede us, who helped shape the circumstances and environment in which we operate.
As taxpayers, recipients of public services and professionals entrusted with the retirement security of public employees, we stand on the shoulders of those who envisioned, designed, created and administered the retirement benefits we oversee today, benefits that provide financial dignity for public servants after a career of work. In many respects, the plan designs that enable these benefits serve as models and aspirations of retirement benefits for those employed outside the public sector.
Although we are heirs to and stewards of this incredible inheritance, the environment facing public pensions is uncertain and perilous. The effects of the 2008 market decline on public pension funding levels, combined with the poor fiscal condition of many states and cities, are creating opportunities for opposition to public pension plans. Traditional pension benefits outside the public sector are slowly but surely vanishing, and a growing chorus of critics and opportunists appear determined to deliver the same fate to public pensions. We are at a crossroads.
Author and publisher William F. Buckley Jr. once famously described his mission: “It stands athwart history, yelling Stop.” It is a sentiment with which many can identify at one time or another. I'm with Mr. Buckley: Stop the efforts to terminate this last bastion of decent retirement benefits for working Americans. Stop the dogma that would convert an efficient and effective method for delivering retirement income into an inefficient system of on-your-own retirement, replete with a few winners and many losers. Stop the initiatives to rob employers of their ability to retain qualified workers needed to perform essential public services. Stop creating pension plans you are unwilling or unable to pay for. Stop diverting required pension contributions to other spending priorities. Stop exploiting pension loopholes to enrich yourselves. Stop the exaggerations and distortions. Stop!
When pension benefits are designed, funded and managed properly, they display a simple elegance and purpose that demands recognition and preservation. In many cases, restoring sustainability to public pension plans will require adjustments to accommodate changing fiscal and political realities. In fact, such adjustments are embedded in the history of many plans. But when making such amendments, we must hold onto the core elements of public pension plan designs that make them beneficial for everyone. These elements include mandatory participation, shared costs, pooled assets invested by professionals over long time frames, and a benefit that cannot be outlived. These elements are indispensable to sound retirement policy and should serve as a line in the sand.
Because these core components of public pension plan design promote retirement security — which benefits everyone — they also should be part of the design of retirement plans for employees outside the public sector. Why should public workers be the only ones to benefit from sound retirement policy?
But there is another, less altruistic reason for wanting to restore traditional pension benefits for employees outside the public sector: Ultimately, the public is unlikely to support retirement benefits that are available only to public employees. For this reason, policymakers should seek to expand the scope of traditional benefits, rather than moving toward the lowest common denominator.
Preserving and protecting decent retirement benefits for public employees — indeed, for everyone — is a high and noble calling, one to which many already have been summoned and have responded. It is a calling that demands the use of reason and judgment, knowledge and expertise, and cooperation and principled compromise.
Keith Brainard is the Georgetown, Texas-based research director of the National Association of State Retirement Administrators.