Around late 2007, early 2008, did you notice something about your 401(k) or 403(b), your retirement accounts?
If you’re like most of us, you took a hit, a big hit if you were heavily invested in stocks.
Just like public pension plans did. Even Arizona’s best one, one of the best in the country, the ASRS pension plan, one that covers most government workers, including teachers.
Prior to 2008, that retirement fund was solvent, just like yours. The pension was fully funded, the investments sound, even conservative. Unlike some states’ plans, which chose to gamble on riskier products.
But if we listen to some of the so-called reformers today, the plans and the folks who contribute to them are the villains.
We hear from the Right that public pension plans — even ones as sound as the ASRS — are unsustainable, that public employees receive huge retirements and “Cadillac benefits.”
And in some cases — particularly the law enforcement and politician pension plans in Arizona — there is some truth to that.
But with the state’s largest, ASRS, neither is true.
The average pension in the ASRS system is $19,000 a year, hardly extravagant. And the health plan is a retiree-funded one, with taxpayers footing none of the bill; a retiree with his family on it will pay about $12,000 a year for the health insurance. In fact, the recent Pew Study of state pension plans noted that Arizona’s health plan is the strongest funded in the nation. In addition, Arizona government employees have always been required to provide 50 percent of their retirement contribution, matching the taxpayers’.
But public pension critics want you here in Arizona to believe that our pension plan is just like the ones we hear about in other states, where employees were required to contribute little to their plans and receive very generous benefits.
They are correct in that the most egregious parts of public pension plans need reform. No one should argue that.
But are the public employees really just freeloading villains living off the public trough, as the more vociferous critics would have you believe, so much so that the pensions are unsustainable?
Not in Arizona. However, if the ASRS plan did sustain losses in the last few years — just like your individual plan did — does that make it the Bad Guy?
Or is the Bad Guy part of public pension critics, attempting to change the subject?
Was your 401 or 403 decimated because of the state’s pension plan? Or was it something else that caused the dramatic decline?
We know the answer to that: Politicians of both parties who urged banks to provide more housing loans, unethical bankers who gave mortgages to people clearly unable to qualify for loans, Wall Street financiers who packaged those loans into products bought by your stocks and states’ pension plans, in part based on ratings agencies like Moody’s and Standard and Poor giving those packages solid ratings even when it was clear they were junk, an administration who weakened the regulatory agencies charged with overseeing the financial services industry.
And when the housing market blew apart, the entire financial house of cards created by the banks and Wall Street came crumbling down. And with it, many of our individual retirement accounts and many of our states’ pension plans, plans that up to the financial debacle in 2008 were sound.
Now, these same folks who helped crush our plans are the very ones leading the charge against public pensions, having the nerve to claim they are unsustainable even as they were the ones who made them so.
Worse, they are setting us up for the same thing in the future: Banks too large (even larger now) to fail, Wall Street remaining largely unregulated, some of the same questionable practices that got us into this mess continuing unabated.
And some in the Right Wing media are willing accomplices, telling that there is too much regulation of Wall Street and not enough public pension reform.
In the meantime, we’re being set up again as the fall guys, somewhere in the future once again seeing our retirement funds go belly up because of the practices of some in finance.
And while some call for pension reform, they are curiously silent as some of the very people who created the Wall Street Doomsday continue to make obscene amounts of money in salary and bonuses, still treating Wall Street like it’s Las Vegas and they are playing with house money.
Only it’s not — it’s our money.
Even as they do so, they want us to see public employees as the villains who are ruining states.
So, yes, some public pension reforms are needed, ironically in part due to some of the critics’ own behavior in the last decade. But as long as the financial services industry remains unreformed, we are likely to see ourselves back in 2008 soon enough. And public pensions will have nothing to do with it.
Mike McClellan is a Gilbert resident and former English teacher at Dobson High School in Mesa.