Is it time to abolish public sector pensions?

Our nation’s “pool” of public employee pension money is five times larger than the Social Security Trust Fund—yet succors six times less Americans. Why should taxpayers fund economically harmful and precarious public sector pensions? Political commentator Edward Ring explains how public employee pensions steal citizens’ money to support an unfair, politically-motivated system. Ring enjoins that public sector pensions be eliminated and the funds relocated to the Social Security Trust Fund.

Public-sector pension funds, because they involve trillions of dollars, are too big to beat the overall rate of investment returns, and ultimately the rate of investment returns cannot exceed the rate of economic growth. The fact that investment returns have exceeded the rate of economic growth over the past few decades is precisely the reason there has been a widening in the gap between the super-rich and the desperately poor in America. It is the reason for the financialization of the American economy, where asset bubbles create collateral to create debt to create liquidity to create consumption to create profits.

This can’t go on, but the money managers want it to go on so public sector pension systems can buy another quarter of phony solvency. The alternatives are unpleasant to contemplate.

A few years ago the largest public sector pension system in the United States, the California Public Employees Retirement System with over $300 billion in assets, announced it was going to double the required payments from participating agencies over the next five years. That process is well underway and is the primary motivation for the hundreds of local tax and bond proposals on every primary and general election ballot in the state. If there is a recession, much less a depression, it won’t be enough.

Meanwhile, in the rest of America, those private-sector workers who are required to save money in 401k plans to supplement their eventual Social Security benefit, are now watching their retirement security vaporize before their eyes.

This article originally appeared in Fox & Hounds Daily. Read the whole thing here.

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