Friday, May 6, 2011

Pension Reform—Give Everyone A Decent Retirement

Contrary to the myth that teachers are retiring with fat pensions paid for by the taxpayers, a recent study by the California Foundation for Fiscal Responsibility found that California State Teacher Retirement System (CalSTRS) benefits are smaller than those for almost all other public employees, at least the taxpayer portion, the New York Times reported today.  The foundation excluded employee contributions from their calculations, which vary considerably between occupations, thus giving a comparison of what the taxpayers contribute toward their pensions. Compared with other public sector workers, California’s teachers get very little from the taxpayer.

While teachers do pay a relatively large portion toward their own pensions (8% of their paychecks), they are lucky to earn 60% of their working salaries upon retirement. Indeed, the average benefit payment is only $3,300 per month (See CTA website), in a state where rents and mortgages can easily be that much or more. The sad truth about CalSTRS is that almost no one can retire on that alone and continue living in California.

However, rather than calling for better fund managers and increases in state contributions so that benefits could be increased, Gov. Brown has committed to cutting pensions, supposedly to help close the state’s $15 billion deficit. The problem with this strategy is that public sector pensions have hardly any impact on the state budget, especially CalSTRS, where the state only adds an additional 2% over and beyond what the teachers contribute. Furthermore, slashing state contributions would cost the state far more than it would gain—the CTA website says that each $1 in taxpayer contributions to CalSTRS creates nearly $8 in economic output. (Every dollar in a retiree’s pocket is money that can be spent on food, medical care, housing, and leisure).

Ultimately, though, what we should all be demanding is a decent life for everyone, from cradle to grave, including housing, healthcare, good food, and leisure time, especially for our most vulnerable members of society. No one should be forced to move to Mexico or India when they retire just to be able to afford to eat. And no one should be forced to live in austerity now, just to have the chance to retire.

1 comment:

  1. The truth is few teachers get 25, 30, or 35 years into the PERS system, regardless of whether or not they paid into Social Security.

    And God forbid if they have had years paid into Social Security prior to teaching; they get cheated out of the full amount thanks to WEP/GPO if their state doesn't pay Social Security.

    Right now I collect a huge sum of $300.40 a month in PERS that I managed to become vested for after my school district wrongfully terminated me three years ago. I am collecting it a full nine years before I could be eligible for the max. The vast majority of teachers in this day and age do not have lifetime careers in education, and reformers are seeing to it they NEVER do again.

    The trend now is to harass, force into retirement, or fire teachers who are over 50 because they are more expensive and less malleable than young teachers.