One of the great issues in the debate over the relative compensation of public employees versus private sector employees is the value of public employee pensions. Most (all?) public employee pensions are defined benefit plans and while public employees are underpaid in terms of salary their pensions are seen as unusually generous. Kevin Drum has a good post up discussing the issue with a writer from the American Enterprise Institute that is, I think, well worth reading.
The only thing that I would add is that public employee pensions are generally not pensions received in addition to Social Security, like private sector pensions are. Public employees in many states have opted out of the Social Security system so their pension plan is the only retirement funds they receive - not gravy on top of their Social Security benefits. This is an important fact that is very rarely ever mentioned in these debates.
1 comment:
Generally good points. Public employee pensions are a mix, however.
Plans like PERA are defined benefit plans that replace both social security and typical private sector plans (and are a better deal for the money for beneficiaries). Most permanent, full time civil service system state and university and school district employees have pensions of this type.
Many local governments and independent agencies like universities have some employees who pay social security tax and participate in a supplemental retirement plan (sometimes defined contribution, sometimes defined benefit). The supplemental plans aren't identical to private sector 401(k) plans in most cases, but they are roughly equivalent.
Post a Comment