Pensions and Politics
As Americans head for the polls today, pension reform is front and center for more than a few politicians in waiting. Unfortunately, the situation is far from trivial and transcends global borders. A trip around the world illustrates the potential perils:
- "Analysis - Pensions victory leaves Sarkozy in tight corner" by Catherine Bremer (Reuters, November 1, 2010)
- "Legislators closely tied to pensions" by David Knox and Patrick O'Donnell (Akron Beacon Journal, October 31, 2010)
- "Public pension reform key issue in California race" by Nichola Groom (Reuters, October 27, 2010)
- "Vince Cable vows 'decent' state pension for all" (BBC, October 25, 2010)
- "Pensions Become Heated Issue in 2010 Politics" by Stephen Fehr (State Bill Colorado, October 1, 2010)
- "Taking the politics out of pension reform isn't the answer" by Tony Barber (Financial Times, July 7, 2010)
- "A Global Pension Problem" by Professor Andrew Clare (The Investors Journal, March 2010)
- "What makes Germans so very cross about Greece" (The Economist, February 23, 2010)
- "The trillion dollar gap: Underfunded state retirement systems and the roads to reform" by Susan K. Urahn et al (The Pew Center on the States, February 18, 2010)
I foresaw the tempest several years ago when I then described the inevitable "politicization" of employee benefit plan issues. On July 27, 2006, I wrote of a "tea party redux" with numerous state pensions in serious turmoil and the ill-effect on taxpayers who vote.
Alas, the problem has become much worse since then. According to "Pension Politics" by Girard Miller (Governing, July 22, 2010), the "blowout has not been capped." Material accounting changes are on their way, alongside significant economic devastation for states, cities and counties alike.
In the words of the former U.S. Speaker of the House, Tip O'Neill, "all politics is local." The problem is that our flat earth economy makes retirement plan reform a mandate for everyone, regardless of where you live. The longer the politicians wait to tackle the obvious need for change, the more acute the pain for us all.
