By Ronald Stein
In these trying times coping with the Coronavirus, and its huge impact on businesses and employment, the younger generations have been set up to pick up some the costs of the lucrative defined benefits that their parents and grandparents voted in for themselves.
For the government union employees, it’s enticing for them to retire early and receive lucrative guaranteed retirement checks and in many cases, enjoy more retirement years than the working years they put in to qualify for those “guaranteed defined” benefits. As we all know, over time, defined pensions have become more generous and the time of service required to retire reduced.
We’re constantly reading about those “unfunded” pension liabilities, as the monies set aside to pay for that endless commitment are apparently not earning enough annual returns to pay for that commitment, thus “unfunded” is appropriate and scary for the younger generations.
Government pension systems are generally funded by four revenue sources that vary in each jurisdiction: deductions from an employee’s paycheck; contributions from the employer; investment earnings from the pension fund; and taxpayers. In the case of taxpayers, it’s going to be the youth that had no vote on these financial obligations.
Unless pension funds around the nation continue to earn 7% or more per year on their investments, it’s likely that taxpayers will be on the hook for trillions of dollars of promises to government unions. These promises have been made by politician’s past and present, resulting in pressure to increase taxes and cut government services.
Our kids had no say in the implementation of those programs, but as upcoming taxpayers, they are the safety shield for the Unions efforts to maximize lush guaranteed retirement packages for their union members. Our kids will have the financial responsibility to make up for any deficiencies from the pension fund investments.
The Unions have no guilt feelings about DEFINED benefits, regardless of available funds to pay for those benefits, as the responsibility to pay them will be on the backs of the younger generations that had no vote on their future financial responsibilities.
It’s amazing that “entitlement” to those promised DEFINED benefits, will drive the so called “entitled” parents and grandparents to put the costs of those entitlements onto their kids!
State and local workers are promised generous DEFINED BENEFIT PENSION PROGRAMS that few private sector companies offer any longer because they are unaffordable and unsustainable. The private sector offers defined “contribution” programs, i.e., 401k plans or something similar, which NEVER impact current or future taxpayers.
Making matters worse, thanks to complicit politicians, the state and local governments have failed to adequately fund these overly generous DEFINED benefit pensions. The huge unfunded pension liability debt crisis is the inevitable result that younger generations, unable to vote today, that will bear the costs.
Fully funding these pensions is unfair to current hard working taxpayers, so the “consensus” of the courts and current taxpayers is to defer the responsibilities for paying for these overly-generous “defined retirement benefit” pension programs to younger generations, for them to pay higher taxes and work later into their lives to pay for the promises of previous generations, to subsidize older Americans.
This matters for taxpayers in California—and other states—because pension obligations, once made, are virtually impossible to renegotiate or discharge. Since states are sovereign entities with unlimited ability to tax, and because they cannot declare bankruptcy, any government pension shortfall must eventually be paid by the taxpayer.
It’s frustrating and appalling that the “courts” are saying that future generations will continue to be legally responsible for DEFINED BENEFIT PENSION PROGRAMS established by previous generations! Are the courts really supporting taxation on younger generations without representation?