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Friday, Apr 20, 2018
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Letter of the Day

Addressing reality in pension funding

This letter is in response to "Defined-benefit plans should be fixed, not dumped" (Other Views, June 29). Pension reform is now being addressed in the Florida Legislature. I was honored to serve on the Government Operations Subcommittee in the House this past session. We heard a great deal of testimony on this issue. David Crane, the author of the column referenced above, attempts to use third-grade math to explain how a defined-benefit plan operates. Unfortunately, he employs kindergarten thinking to solve a very complex problem. Not only were his examples erroneous, he stoops to shameful name-calling by writing "these politicians are little better than thieves stealing from future generations." I am a politician. And I have a thick skin. But let's review the facts. (I would have expected more from a Harvard grad!) A defined-benefit plan is a promise to pay a set amount each month for life when retirement commences. (This is where Crane's example was horribly off target). I wonder how many readers of this column are participants in a defined-benefit plan?
Most retirements in these plans start at age 65. What has happened to the American life expectancy in the past 30 years? Yes! It has increased! In 1961 it was 69 years, and now it is 78. Now for fourth-grade math: What happens when you fund pensions expecting someone to collect for four years but they live an extra five years? Yes! It costs more money. We have shortfalls. The majority of state pensions are critically underfunded. California: $128 billion. New Jersey: $174 billion. And last, but not least, Illinois: $200 billion. Florida is a relatively mild $19 billion underfunded. Yet, we are told that we have one of the best managed pensions in the world. Scary. But I ask Crane: Where do you suppose the money will come from to pay for these shortfalls? Yes - the taxpayer. I believe Florida taxpayers have their own struggles meeting monthly bills as of late, rather than worrying about additional funding of the state pension. That's the job of the Legislature. Perhaps we could ask them if they would see fit to implement a state income tax to help? I think not. About that stealing from future generations, Mr. Crane ... Simply put: Because people are living longer, traditional pensions have become exorbitantly more expensive - a point Crane conveniently omitted. We can no longer afford to guarantee monthly pensions for twice as long as they have been paid in the past. This requires the Legislature, by duty, to take this issue head-on, right now. We are. The reality is that 75 is the new 65. People are going to have to work longer to retire. Facing this reality could be the start of a constructive dialogue in resolving this important issue. State workers deserve a good pension, and taxpayers deserve good stewardship of their money. It is time for some old-fashioned adding and subtracting, Mr. Crane. Dan Raulerson Plant City The writer, a CPA, represents District 58 in the Florida House of Representatives. He is a Republican.
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