The readers’ forum

Guaranteed benefits could work for everyone


Calling it “the responsible path,” a Miami Herald editorial, Past Time for Pension Reform, urged Florida House Speaker Will Weatherford and Senate President Don Gaetz to push legislation that would effectively end public pension retirement plans for Florida’s 623,00 public employees by enrolling all new hires into 401(k) style plans.

There’s nothing responsible about putting Florida’s public employees on a path more likely to lead to poverty than retirement security.

The 401(k) style investment accounts aren’t retirement plans. While they have become the norm for what passes as private sector retirement benefits, they hardly have been distinguished performers and rarely yield true retirement security. They can cost 47 percent more to operate than traditional plans — plans that account for just 3 to 6 percent of total state or municipal budgets.

The 401(k) was intended as a pre-tax compensation shelter for executives who could afford to spend money to invest, and who were encouraged to do so by employers that offered generous matching dollars as an incentive. That’s why Congress enacted strict limits on how much one may contribute annually.

The United States median income is $50,233. Most Americans can’t make the maximum 401(k) contribution, or build an account that would take them through the end of life — and the once vaunted employer match is rapidly disappearing.

Senator Tom Harkin (D-Iowa), chairman the Heath, Education, Labor and Pensions Committee, has held numerous hearings on America’s pending pension crisis. His research shows more than half of Americans have less than $10,000 in savings; just one in five will have a pension to see them through retirement; and in 2010 nearly six million Americans over 65 were living in poverty.

The Miami Herald got it right in calling for pension reform, but we disagree that guaranteed pensions should be eliminated.

We support the Florida Supreme Court’s decision requiring all public workers to contribute to their pensions. Municipal workers nearly always have done so. We believe in strict adherence to required actuarial contributions. We oppose unfunded future benefits in lieu of increased compensation now. Workers and employers should negotiate length of service, DROP reforms and increased employee contributions to keep plans stable.

The Miami Herald correctly noted FRS is one of the best funded state plans in the nation. A large majority of the state’s municipal plans also are well funded and financially sound.

It’s not past time for public pensions to be axed. It’s time to focus on the ways guaranteed pension benefits support our economy and our seniors. Guaranteed benefits could work for all of us. It’s time to bring the private sector in from the cold.

Raymond Edmondson, Jr., CEO, Florida Public Pension Trustees Association, Tallahassee

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