Commentary: Is it fair to ask workers who will never have access to a defined-benefit pension plan to contribute to the fund for other workers who do?
Defined-benefit pensions were fairly common back when my father was working for Mountain Bell in the 1960s. They ensure that longtime employees will get a certain percentage of their salary each month for the rest of their lives after they retire.
Most employers switched over to 401(k) plans at about the time I entered the job market in the 1980s. Instead of being guaranteed a monthly income, workers were told to play the stock market. Employers made matching contributions at first, but fewer do now.
A 2018 report by researchers at the University of New Mexico found that two out of three private-sector workers in New Mexico now have no pension or retirement plans at all where they work.
Nearly 80 percent of private-sector workers in the state have less than $10,000 in savings. Without savings or a pension, Social Security will be their only means of survival once they stop working.
The words “private sector” are critical to the above statistics. Things are much different for government workers, where strong unions and defined-benefit pensions are still in place.
Good for them.
But, is it fair to ask private-sector workers who know they will have to rely on Social Security, or work until they die, to pick up the tab when the retirement fund for government workers runs short?
That’s what Senate Bill 72 would do. It would take $76 million from the state’s general fund and transfer it to the retirement fund for state workers. The bill would also increase the state’s monthly contribution into the fund for the next four years.
This comes at the same time that Gov. Michelle Lujan Grisham is requesting a 3 percent salary increase for all state workers.
There’s no disagreement that the fund for state retirees is dangerously underfunded, and that action needs to be taken it ensure its solvency. And, the Senate bill does not put the burden solely on the state. It also calls for current workers to temporarily increase their monthly contributions, and freezes the cost of living increases for retirees.
For that reason, the bill can be sold as a fair and equitable solution. Everybody kicks in a little bit to solve the problem. And, as long as the stock markets don’t crash again, it should all be fine.
But it does perpetuate a system that is fundamentally unfair. There is no good reason why government workers should have benefits that are not available to other workers in the communities they serve.
My choice would be to make those benefits available to all. But since that’s not going to happen, I think we need to reconsider some things.
We have made commitments to former workers, and those need to honored. But we don’t need to keep making the same commitments today to new workers who are just beginning their careers.
And, we shouldn’t turn to the private-sector workers paying state taxes, including on their Social Security benefits, to ensure that the retirement fund for state workers remains solvent.
In a recent column supporting the Senate bill, Workforce Solutions Secretary Bill McCamley and Pamela Coleman of the state personnel office noted that this problem is not new. The funds have needed infusions in the past to remain solvent.
They said other states are switching to 401(k) plans. Those plans are cheaper, but don’t offer the same security for government workers, they argue.
OK, then they should pay for that security, not us.
Walter Rubel can be reached at waltrubel@gmail.com.