What good is there in having scores of publicly managed micro-hedge-funds dotting the Commonwealth? In Massachusetts, while state law mandates the terms of public pensions paid by local governments, local investment boards still manage their portfolio decisions. This makes little sense. Local investment boards have little upside, and have historically earned lower returns. There is certainly a place for local experimentation in pension matters, but the management of pension funds isn’t it.
We’re in the middle of a much bigger debate on political centralization. Europe must decide whether countries will cede further fiscal and regulatory powers to a central authority, or whether individual nations like Greece will regain control of their currency. Within our Commonwealth, Boston chafes under the limits that the state places on its ability to tax restaurant meals and issue liquor licenses.
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Yup...those teachers, firefighters, cops and grass cutters are bankrupting all of us and they're getting so rich while doing it.
Public employees largely fund our own pensions in Massachusetts. On average, we pay 8-10% of our salaries to fund our pensions. Our employers pay 2-3% of payroll, much less then they would pay under Social Security (6.2%). The system works. The Massachusetts pension system is a a forced savings program for public employees. It ensures we will have money set aside for our retirement so we can live decent lives. Glaeser's suggestion to allow cities and towns to negotiate higher current wages for lower pensions will lead to the classic mistake of seeking short-term gratification in place of long-term investment. It is a bad idea.
masmp2: Your "employers" are the taxpayers. If better management means you can maintain your overall level of compensation while reducing the burden on taxpayers, isn't that a win-win?
So, let's see if I got this right: public retirees are the one percent everyone is complaining about?
Defined benefit plans are toast. It's already happened in the private sector where most DB plans have been replaced by 401(k)s. And it will happen in the public sector when taxpayers decide that they can't take it anymore. Defined benefit plans are simply too expensive. Public employees should pay into social security and participate in 401(k) plans. The alternative is Greece.
This isn't a D vs. R issue, all public employees and politicians are guilty. / / Public employee benefits, at all levels of government, should be indexed to be no higher than the average non-public employee's, then if they want to see an increase, they'll need to make efforts to raise all boats, rather than just seeing to it that their own pockets are lined.
I guess we are. It's great to be appreciated, and recognized more for our pensions than what we do every day.
Do the math. Contributions from public employees don't come close to covering the cost of their pensions, and the taxpayers pay the difference.