Washington Cooks Up a Fix for State Pensions

[Valin]

Via Meadia:

7/9/13

 

The public pensions crisis is one of the greatest challenges facing the states today, but thus far it has mostly met with silence from Washington. This may be about to change. Mary Williams Walsh, who has been all over the pensions story for the New York Times, is now reporting that Senator Orrin Hatch of Utah is preparing a bill that would allow states to transfer the management of public pensions to private insurance companies. The details are still sketchy, but the basic idea is simple enough:

 

If Senator Hatchs proposal were to become law, a local government that opted for insurance would hold competitive bidding once a year. The winning carrier would give each worker a contract, guaranteeing a retirement-to-death annuity amount for a years worth of work. Public employees unions would no longer negotiate the size of their members pensions; instead, they would negotiate how much the local employer would pay the insurer upfront. The annuity contracts would be portable, meaning workers would take theirs with them when they changed jobs.

(Snip)

 

On the surface, this looks like a smart idea. Two of the biggest problems with public pensions are politicianss tendency to make long-term promises that will be difficult to keep, and the states consequent tendency to overstate the health of their plans while they head toward insolvency. Shifting the responsibility for management to private organizations could help alleviate both of these problems.

 

(Snip)

 

________________________________________________

 

Stand by for screams and wailing and gnashing of teeth from SEIU, AFSCME, and other government union, and their allies in congress. Sure to be a knock down drag out fight with no holds barred. This is going to make WWII on the eastern front look like a Sunday school picnic.