Britain’s conservative-party head David Cameron didn’t win any thanks from his own party for a speech yesterday in which he called the division between public-sector and private-sector pension plans in Britain “apartheid” and said that he wants Britain “to move increasingly towards defined contribution rather than final salary” — defined-benefit — “schemes.”
Pension politics is hardly “arpartheid.” But Cameron’s criticisms of defined-benefit pensions, absent that specific characterization, hold here in the US, too. As the Financial Times said following Cameron’s speech, “there is a yawning gap in the UK between public and private sector provision. … Private sector workers expecting to work into their 70s can only look on and envy, while forking out the taxes to pay for others’ longer retirements.”
In New Jersey, which has severely underfunded its pensions, and to a lesser extent in states and cities like New York, which are certain to see sustained multi-billion-dollar investment shortfalls in their funds in the coming years, private-sector taxpayers who have seen their own 401(k) retirement accounts decline precipitously in recent months likely will be paying higher taxes to make up the difference in public-sector workers’ guaranteed pensions.
The huge losses in those private-sector 401(k)s, of course, are hardly an argument for switching everyone over to defined-contribution pension systems without serious reform. The millions of private-sector workers who had planned to retire using the rising values of their houses and stock portfolios are likely the financial crisis for next decade.
Still, though, at a time when elected officials are going to have fight unions for wage and other concessions to achieve budget savings, it’s worth pointing out to public-sector employees that their defined-benefit pensions are obviously far more valuable than even they had thought just a few years ago.
Thus, it’s not unreasonable for them to give something else back, possibly shouldering more of their current healthcare costs to start with, while all levels of government and the private sector work on a pension fix for both the public and private sectors.
You may also like
Parsing the Impact of Mamdani’s Tax Hike Plans
The front-running candidate for New York City mayor, Zohran Mamdani, has said he can finance his costly campaign promises – including free buses and universal child care – by taxing only a sliver of the city's residents Read More
How 1199 Earns its Reputation as Albany’s No. 1 Labor Power Broker
For the fourth time in six years, the president of New York's largest health-care union, George Gresham of 1199SEIU, has won the top spot on the "Labor Power 100" list from City &am Read More
How a Medicaid ‘Cut’ Could Lead to More Unionization of Home Care Aides
A money-saving maneuver in the newly enacted Medicaid budget could end up increasing costs in the long term – by paving the way for more unionization of the state's burgeoning home health workforce.
Read More
Pols Craft More Handouts for Sinking Construction Unions
New York’s construction unions, facing a decades-long decline, are employing a time-honored tactic: getting state government to stop people from competing with them. Read More
Union Rallies Long Island Pols Against NYC Kids
New York’s statewide teachers union has been cashing in political chits as it seeks to block new charter schools from opening in New York City, asking the senators and assemblymembers Read More
New York’s pricey hospitals draw pushback from labor
A City Council hearing in Manhattan on Thursday promises a rare scene in New York politics: hospitals playing defense. The council is debating whether to establish a watchdog agency focused on the high price of hospital care in New York, with a goal of helping the city and other employers contain the rapidly rising cost of health benefits for workers. Read More
Utility board turns into union tool
The idea that the PSC would artificially drive electricity costs higher to benefit a political constituency represents a new low. Read More
New Docs Raise Big Questions About NY’s Megafab Mega-Deal
The Hochul Administration published a pair of documents concerning the Micron Megafab deal that raise more questions than they answer. Read More