Arnold Schmidt: Pension commitments should be upheld

November 7, 2013 

Some complaining about pension shortfalls solve the problem by the patently unfair action of cutting benefits to retired workers. Why unfair? Imagine taking a job at a particular salary. You work 40 years, then retire. A few years later, your old boss calls, asking you to repay some of your salary. It seems he miscalculated and paid you too much. How would you feel? Would you happily return the money you’d earned? Of course not. Pensions form part of employee compensation. Many take jobs at salaries lower than comparable positions to receive better benefits. Reducing benefits for existing workers resembles a salary takeback.

If paying for benefits causes problems, a solution exists. Current law allows some organizations to promise benefits now, but to fund those benefits in the future. Legislation should require full, annual funding of all benefits – public and private – during the life of the worker’s time on the job. Organizations that regularly fund pensions could plan their budgets accordingly. Bad planning by managers in the past should not ruin the futures of employees who did their jobs. Workers accepted a deal; pay them. It’s unfair to change a contract after the fact.



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