As France-based Veolia Transportation takes over responsibility for New Orleans’s streetcar and bus system under an initial five-year contract, New Orleans’s transit workers will be growing accustomed to a private-sector-style pension scheme, too.
While workers at New Orleans’s Regional Transit Authority (RTA) will continue to belong to their current unions and retain their wages, seniority, and future-collective bargaining rights, they’ll see their old guaranteed pension plan frozen.
Though workers will be able to collect the benefits they’ve accrued so far from their old defined-benefit plan upon retirement (theoretically, see below), the new pension benefits they earn from now on will be different.
The new plan is a Veolia 401K, under which employees will take responsibility for their own future retirement benefits. While the plan is “very generous,” said a Veolia spokesperson, and doesn’t require employees to match the employer’s contribution, workers will be responsible if their individual accounts eventually fall short.
It would be nice to say that New Orleans moved in this direction because of general enlightenment. But it did so largely because the old RTA plan is broke, with the transit authority now in discussions with federal officials on how it’s going to pay promised benefits under the old plan.
Veolia wouldn’t take over that plan — which illustrates that it’s an impossible task to find a private-sector firm willing to take on the obligations that states and cities continue to make recklessly to their employees on behalf of the taxpayers.