Pretty good deal for the public sector

In 1983, hungry for cash, government raided employees’ collective retirement fund and, when the time came to re-pay debt, raised taxes to boost contributions to the fund, cut retiree benefits and increased the retirement age of those eligible for the fund.

Sound like the current proposal to deal with Maine Public Employee Retirement System debt?

Wrong.

It was Social Security.

So, to every public employee who — in the past several weeks — has said out loud or thought to themselves that private-sector employees haven’t suffered or aren’t paying their share, they have and they are.

Gov. Paul LePage has a strong proposal before the Legislature to tackle the crushing unfunded actuarial liability, or UAL, in MainePERS. The plan calls for public employees to contribute an additional 2 percent of their salaries to the retirement fund. The plan also raises the retirement age from 62 to 65 years and freezes their cost-of-living adjustment for three years.

Sound familiar?

Private-sector employees are familiar with nearly identical changes made in Social Security years ago. And there are almost certainly more changes coming soon to make Social Security even less generous.

Public employees argue that the governor’s plan is unfair, that the state made a promise to fully fund their retirement and Maine is obliged to honor that promise without burdening fund members.

Social Security promises were equally sincere when offered and equally vilified when broken. And, yet, broken they were because the fund was running dry and the beneficiaries were forced to pay.

We can blame politicians for raiding these funds and blame unstable markets for compounding debt, but the simple fact is that Social Security contributors were taxed to repair that fund and it does not seem overly cruel to propose that contributors to MainePERS do the same.

In Maine, public-sector employees currently contribute 7.65 percent of their earnings to PERS. Maine taxpayers — public employees included — contribute another 5.5 percent of the annual public payroll to PERS, plus 14.6 percent toward the UAL.

According to the governor's office and PERS staff, money contributed to individual retirement accounts is dedicated to those accounts. Whether public employees contribute 7.65 or 9.65 percent, it all goes back to beneficiaries. The additional 2 percent payroll contribution proposed in the governor's budget will not drift off to the general fund as has been suggested by opponents of the plan.

If public employees contribute an additional 2 percent, then Maine taxpayers can reduce general fund contributions by 2 percent, using that savings to pay other costs of government, which might just reduce everyone's tax burden.

The prospect for public employees under the governor's proposal is that they could put away more for retirement and save more of their own tax dollars now being spent to pay the crippling UAL. That sounds like a pretty good deal, and better than the retirement prospects for private employees.

Upon retiring, vested public-sector employees are guaranteed 50 percent of their highest three years' average salary. Social Security doesn’t pay close to that percentage, so the privately employed must contribute additional funds to personal retirement accounts to achieve a livable retirement income or risk the very real possibility of poverty in their twilight years.

Talk about pain.

The governor’s proposal also raises the retirement age of public employees to the retirement age of Social Security recipients, a parity that seems reasonable. But, public employees say being forced to work longer is punitive.

We’ve heard that teachers, in particular, ought to be permitted to retire early with full benefits because mental and physical exhaustion that comes with age is not good for students.

Who is it good for?

Being old and tired is a pretty good equalizer and to suggest that private-sector employees are expected to work for more years than those in the public sector is a ridiculous double standard.

Private-sector retirees have seen their COLA frozen for the past two years and their share of health insurance climb. So, that public sector employees are now facing the same reality is, perhaps, due. Maybe even overdue.

Public and private employees all rely on retirement systems that have been raided by politicians and compromised by an unstable market. Gov. LePage's proposal gives public employees an opportunity to tuck away more of their own money and save millions in public tax dollars.

Sounds like a fair deal.

jmeyer@sunjournal.com

The opinions expressed in this column reflect the views of the ownership and editorial board.

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Comments

CRYSTAL WARD's picture

missing facts

your view failed to contain the changes made in the Maine retirement system in the 1990's
increasing the retirement age and increasing the early retirement penelty by over 4%, creating a two tiered system to lower cost to Maine. Public sector COLA have also been frozen for the last two years also saving Maine a good deal of money. You fail to understand the great cost shifiting going on .Maine was to pay 5.5% into the retirement fund the next two years but they are only going to pay 3.5%per year shifting the other 2% they owe to the general fund to pay for other programs. The Bill Maine owes to the retirement fund has had 2% shifted to have the very people they owe the bill to pay . The average MePERS payout is 19,300 per year about the same as social Secuirty average payout. Public sector works pay taxes also -- but this plan taxes us more than anyone else. Many public sector retirees have medicare and have paid the increases just like the private sector. The fund is not broke it has over 10 Billion dollars in it right now --the sky is not falling and there are way to deal that do not over burden the tax payers-- Lepages scare tactic are not completely based in fact but are set up to do the most hurt to a very small group of Mainers .

Case Enoch's picture

From the article: "Upon

From the article: "Upon retiring, vested public-sector employees are guaranteed 50 percent of their highest three years' average salary."
Response: That is absolutely false. Vested public-sector employees for the State of Maine are paid a percentage for each year of service. For vested State of Maine employees, the range starts at 10 percent, not 50 percent.

From the article: "The governor’s proposal also raises the retirement age of public employees to the retirement age of Social Security recipients, a parity that seems reasonable. But, public employees say being forced to work longer is punitive."
Response: It's not just public-sector employees complaining about a raise in retirement age. Many, many private-sector employees are complaining about the proposal to raise the retirement age regarding Social Security. As of now, the retirement age for State of Maine employees is the same as for Social Security, so there is already parity.

"Being old and tired is a pretty good equalizer and to suggest that private-sector employees are expected to work for more years than those in the public sector is a ridiculous double standard."
Response: Again, public-sector employees in Maine are required to work to the same ages as private-sector employees.

Jerome Young's picture

That was well done. I would

That was well done. I would add that Gov LePage wants to repair, and replenish the funds that for all those years has been kicked down the road. He is trying to save the PERS system. Once repaired, we should make it illegal for the legislature to raid this ever again. But ignoring this could result in PERS crashing.

RONALD RIML's picture

The moral equivalancy of a desk jockey, Ms. Meyer??

"Being old and tired is a pretty good equalizer and to suggest that private-sector employees are expected to work for more years than those in the public sector is a ridiculous double standard." - M. Meyer, Day Editor, LSJ

C'mon - just how hazardous is it for you now, Ms. Meyer? The 'Day Editors' of old ran real risks when one of those Underwood typewriters fell off one's desk and bounced off toes and/or instep. The modern keyboard will barely elicit an Anglo-Saxon expletive or run in one's hose during its downward travel. I know there are other risks - 'Newshawks' in their cups would spill them out to me in a different time and city.

But there just might be a reason why certain public-sector employees aren't expected to work as long as private-sector ones, Ms. Meyer. It takes longer for that older policeman to rescue you from an assailant as he climbs the stairs with his walker.

Jim Cyr's picture

Public Sector

A "Fair & Balanced" editorial! So rare these days!

Ellen Levesque's picture

Finally someone has made

Finally someone has made sense out of the comparisons between private and public sector retirement plans.

RONALD RIML's picture

While completely ignoring

The comparisons between some public and private sector occupations.

All things being equal - they aren't.......

Doreen Sheive's picture

Confused

Why would you think that by requiring state employees to contribute an additional 2% of their income to the retirement plan would mean that they would be "tucking away more of their money?" The employee will not receive any additional financial benefit so the increase in their contribution only means that they are seeing a decrease in their salary. Indeed, social security does not provide much of a benefit to retirees, however, the employee is not contributing as much to social security as the state employee contributes to the state retirement plan. Plus, most private companies contribute a match to the employees 401k and most paid into andsome are still giving to pensions for the employees. State employees have not had a COLA for the past two years either, and they have also seen the cost of health insurance increase for them. The difference is that there is no cap on the social security COLA, but there is on the State retiree COLA. I would not be as upset with LePage's plan if, since I qualify for social security, I would be eligible to receive my full social security benefits. But, I am not because the law doesn't allow it. I am being denied my full social security benefit because I am a state employee with a retirement system to which I have contributed a lot of money that is now telling me that I should not be allowed to receive an annual COLA of any kind for the next three years. And, in addition, they want to ensure that I cannot get a COLA beyond 2% while the price of everything else is escalating beyond belief.

Doreen Sheive's picture

Confused

Why would you think that by requiring state employees to contribute an additional 2% of their income to the retirement plan would mean that they would be "tucking away more of their money?" The employee will not receive any additional financial benefit so the increase in their contribution only means that they are seeing a decrease in their salary. Indeed, social security does not provide much of a benefit to retirees, however, the employee is not contributing as much to social security as the state employee contributes to the state retirement plan. Plus, most private companies contribute a match to the employees 401k and most paid into andsome are still giving to pensions for the employees. State employees have not had a COLA for the past two years either, and they have also seen the cost of health insurance increase for them. The difference is that there is no cap on the social security COLA, but there is on the State retiree COLA. I would not be as upset with LePage's plan if, since I qualify for social security, I would be eligible to receive my full social security benefits. But, I am not because the law doesn't allow it. I am being denied my full social security benefit because I am a state employee with a retirement system to which I have contributed a lot of money that is now telling me that I should not be allowed to receive an annual COLA of any kind for the next three years. And, in addition, they want to ensure that I cannot get a COLA beyond 2% while the price of everything else is escalating beyond belief.

 's picture

well, of course the right

well, of course the right wing wacko faction of the SJ is trying to put a nice spin on comrade paul's plan.

"The additional 2 percent payroll contribution proposed in the governor's budget will not drift off to the general fund as has been suggested by opponents of the plan."

True, it will go to the wealthiest Mainers in the form of tax breaks, so the lowest among us are going to give multi-millionaires more money. Seem fair?

"Private-sector retirees have seen their COLA frozen for the past two years and their share of health insurance climb. So, that public sector employees are now facing the same reality is, perhaps, due."

well SS and Veterans benefits have not had a COLA in two years simply because, theoretically, there hasn't been any increase in the cost of living. There wasn't a fiat declaring no increase, there just wasn't any. Did the state retirees get something that the rest of American didn't. Don't think so, this is just a smoke screen to deny them any cost of living increases, period.

The reasons given by the reactionary writer of this editorial doesn't pass the smell test. Apparently a lepage stooge is now writing the SJ editorials.

Bob Stone's picture

"give"

The "the lowest among us" are going to "give" multi-millionaires more money. This is an instructive statement as to the world, as Dan sees it.

Dan sees people making above $20,000 as getting a tax break. The 8.5% kicks in at about $20,000. I am rich, in the world of Tron.

We are not giving multi-millionaires anything. The money was not theirs, the lowest among us, in the first place. It was the personal property of the multi-millionaires. Taxes are taken from them by the government. I don't hear the multi-millionaires howling about paying taxes. They can live anywhere they care to live. Live in Maine, pay the taxes.

Tron is just trying to deflect the real issue. The state is broke.

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