There’s an good critique of one right-wing canard regarding the pensions of public sector workers — in this case teachers — by Felix Salmon at Reuters: Felix Salmon smackdown watch: Pensions edition The target is John Arnold, billionaire hedge-fund trader (and Enron alumnus) who’s attacking pensions (though his foundation — another example of the rich using foundations for political ends). Salmon’s argument about pensions is well-worth reading, and the article is also interesting for its charts showing the temporal structures of pension accumulation in different systems, in New York, Las Vegas, and Miami. What they show is that teachers accrue relatively little early on — perhaps for the first decade, then pensions gently rise, then rise abruptly as a teacher approaches 3 decades in the job. Critics see this as an unfair increment. Salmon responds:
So here’s the question. Put yourself in the position of someone who’s been teaching in Las Vegas for 29 years. The way that John Arnold sees things, over that time, you’ve managed to earn pension benefits worth roughly $200,000. If you teach for one more year, then the value of your pension benefits soars to more than $500,000: effectively, between salary and increased pension benefits, you’re being pad about $400,000 for that one year of teaching. Arnold wants school systems to “be able to negotiate retirement compensation for work that is not yet performed” — which is to say, to be able to pay you much less than $400,000 for that 30th year of teaching.
But that’s a very self-serving view of what’s going on in this pension scheme. Las Vegas teachers get their $500,000 package in return for 30 years of teaching, not in return for the 30th year of teaching. There’s a big difference.
The real problem is that this system seems to be designed to allow the funding polity to put off making the necessary and appropriate investment in the teachers’ pension funds.