No surprise here: the costs of the public pension system here in Rhode Island are spiraling out of control, according to a new report from the Rhode Island Public Expenditure Council. The taxpayer share of the burden has almost tripled in the last decade, going from $79.9 million to 2001 to $218 million next year. By 2029, it will be almost 10 times what it was in 2001. The RIPEC official quotes in The Providence Journal report makes a good point about how pensions are kind of an antiquated practice in the private sector:
That’s over the same period in which private employers have all but abandoned lifetime pensions for their employees, according to RIPEC executive director John Simmons.
“One looks at the private sector pensions versus what the public provides. There is no comparison,” he said. “In excess of 80 percent of the private sector has 401(k)s. A large portion of that, the employers are no longer making contributions… But there still is a very robust [public] pension system.”
And here is a synopsis of what the report recommends:
“Given the fiscal crisis facing state and local governments, coupled with dampened market performance, and demographic factors such as longer life expectancies, there is a need to reexamine and reform the pension systems across the state in order to keep state pension contributions affordable,” reads the RIPEC report. “Rhode Island needs to take measures to reduce the annual cost, review the actuarial assumptions and to think about eliminating the risk of the current defined benefit plan. Given the projected out year deficits over the next several years, the state can ill afford the status quo.”
Again, given that pensions have been phased out of the private sector, it would seem very reasonable, if we’re going to keep public pensions, to at least cut back on some of the costs. But no, the NEA union official quoted in the story was having none of it. No surprise there either, unfortunately. Also check out this must-read BusinessWeek story on how public pension costs are soaring across the country and siphoning funding away from public services.