Yet another cry for a change to a 401(k) style of state pension from a politician named Polito!
From John Curry, October 5, 2010
Will this same mentality find its way to Ohio's borders? Let's hope not! The author, Karyn Polito, is a current Massachusetts State Representative and is also the Republican candidate for the Massachusetts State Treasurer. Notice how she sugar coats the harsh realities (and poor choice) of a 401(k) style of pension by saying that her plan has the "characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement?" Karyn, if it walks like a duck and quacks like a duck.....it IS a duck!
John
"Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies."
Karyn Polito
http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20101005/OPINION/10050332/-1/NEWSMAP
A sustainable plan for pension reform
By KARYN POLITO
October 05, 2010 2:00 AM
The Massachusetts public pension system is unsustainable and it's time to fix it.
We rely on a publicly invested contributory pension fund to pay retiree benefits. The current fund balance is about $44 billion. By current estimates, that's about $22 billion short of what is needed to meet our future payment obligations.
Ever-increasing annual infusions of taxpayer money are needed to make up the difference. This year's taxpayer share is about $1.4 billion — money we could spend on other priorities, like education and public safety. This is unsustainable. It's also unfair to jeopardize payments to the hardworking civil servants who are beneficiaries of the current system.
We need a new approach for the next generation of our state's workforce, and this can be accomplished in three crucial steps.
First, we need a political environment where substantive reform is possible. Many so-called "pension reform" bills have been passed, but they fall short of the systemic reform we need. The reason: Beacon Hill politicians. Elected officials are themselves members of the retirement system, and their own greed and self-interest gets in the way of real reform.
We have to draw a line in the sand and make a clean break. We need to say "no" to pensions for politicians and prevent future Beacon Hill pols from receiving a guaranteed right to a public pension. I am not taking a public pension when I leave state service, and other elected officials should follow suit.
Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies.
This new system should not apply to current state workers, only to those we hire moving forward. By moving future workers to a new system, we could save millions of dollars that could be used for other purposes, including offsetting our unfunded pension liability. Also, to be fair to dedicated civil servants whose work places them in danger, we should exempt state public safety workers from this transition.
Finally, we need to be smarter about the way we invest our state pension fund.
The total cost of managing the pension fund for FY2009, inclusive of charges, was about $180 million. Yet, in some cases, investment performance lagged behind the rate of return of the stock market itself. It doesn't make sense to spend money to lose money. We need to make greater use of index fund investments to ensure a better return over time.
We should also enact reform that imposes greater transparency and accountability with our investments. And, we should end the practice of paying bonuses to administrative staff at the pension fund — bonuses that in 2008 ranged from 16 to 20 percent of salaries and cost our state $500,000.
The time for real reform of our pension system is now. We need to keep our promise of a pension to current beneficiaries without resorting to taxpayer funds so the system continues to work long-term. I believe that saying "no" to pensions for politicians, transitioning to a 401(k)-style plan for future nonpublic-safety state employees, and reforming the way we invest pension funds will do that.
State Rep. Karyn Polito, R-Shrewsbury, is the Republican candidate for state treasurer and receiver general.
Will this same mentality find its way to Ohio's borders? Let's hope not! The author, Karyn Polito, is a current Massachusetts State Representative and is also the Republican candidate for the Massachusetts State Treasurer. Notice how she sugar coats the harsh realities (and poor choice) of a 401(k) style of pension by saying that her plan has the "characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement?" Karyn, if it walks like a duck and quacks like a duck.....it IS a duck!
John
"Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies."
Karyn Polito
http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20101005/OPINION/10050332/-1/NEWSMAP
A sustainable plan for pension reform
By KARYN POLITO
October 05, 2010 2:00 AM
The Massachusetts public pension system is unsustainable and it's time to fix it.
We rely on a publicly invested contributory pension fund to pay retiree benefits. The current fund balance is about $44 billion. By current estimates, that's about $22 billion short of what is needed to meet our future payment obligations.
Ever-increasing annual infusions of taxpayer money are needed to make up the difference. This year's taxpayer share is about $1.4 billion — money we could spend on other priorities, like education and public safety. This is unsustainable. It's also unfair to jeopardize payments to the hardworking civil servants who are beneficiaries of the current system.
We need a new approach for the next generation of our state's workforce, and this can be accomplished in three crucial steps.
First, we need a political environment where substantive reform is possible. Many so-called "pension reform" bills have been passed, but they fall short of the systemic reform we need. The reason: Beacon Hill politicians. Elected officials are themselves members of the retirement system, and their own greed and self-interest gets in the way of real reform.
We have to draw a line in the sand and make a clean break. We need to say "no" to pensions for politicians and prevent future Beacon Hill pols from receiving a guaranteed right to a public pension. I am not taking a public pension when I leave state service, and other elected officials should follow suit.
Once we remove the political self-interests blocking reform, we should explore a new system for the future state workforce. I propose a plan that has characteristics of a defined benefit system but also brings in elements of a defined contribution arrangement. People who work in the private sector know exactly how this works — it's basically the same 401(k)-style retirement system used by most private companies.
This new system should not apply to current state workers, only to those we hire moving forward. By moving future workers to a new system, we could save millions of dollars that could be used for other purposes, including offsetting our unfunded pension liability. Also, to be fair to dedicated civil servants whose work places them in danger, we should exempt state public safety workers from this transition.
Finally, we need to be smarter about the way we invest our state pension fund.
The total cost of managing the pension fund for FY2009, inclusive of charges, was about $180 million. Yet, in some cases, investment performance lagged behind the rate of return of the stock market itself. It doesn't make sense to spend money to lose money. We need to make greater use of index fund investments to ensure a better return over time.
We should also enact reform that imposes greater transparency and accountability with our investments. And, we should end the practice of paying bonuses to administrative staff at the pension fund — bonuses that in 2008 ranged from 16 to 20 percent of salaries and cost our state $500,000.
The time for real reform of our pension system is now. We need to keep our promise of a pension to current beneficiaries without resorting to taxpayer funds so the system continues to work long-term. I believe that saying "no" to pensions for politicians, transitioning to a 401(k)-style plan for future nonpublic-safety state employees, and reforming the way we invest pension funds will do that.
State Rep. Karyn Polito, R-Shrewsbury, is the Republican candidate for state treasurer and receiver general.
posted by Kathie Bracy at 1:12 PM
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