The topic of public pensions is an important one. Any discussion should be guided by facts. Unfortunately, David Sirota’s recent opinion piece (“Sirota: The plot against pensions”) fails to meet that standard and misrepresents both the policy work of The Pew Charitable Trusts and the fiscal realities facing state governments.
Mr. Sirota’s assertion that state pension shortfalls are the result of the 2008 stock market crash, for example, is not supported by the data. In 2007, state-run pension plans faced a shortfall of more than $360 billion. This total figure is from the states’ own numbers — and it shows that there was a problem even before the Great Recession hit.
To be sure, a few states such as North Carolina and Wisconsin had well-funded pension plans, but other states racked up billions of dollars of pension debt, among them Illinois and South Carolina. Now state-run pension plans have reported a funding gap of $757 billion due to a combination of skipped payments, higher risk investments and unfunded benefit increases.
One of the most important tasks facing states is to pay down their existing pension debt. Some stakeholders will want to solve the problem of pension shortfalls only with tax increases, while others will want to solve it only with changes to benefits or spending cuts. At the end of the day, there is no one-size-fits-all solution. How states choose to address pension challenges is up to their policymakers and citizens to decide. No matter where the funding comes from, however, the bill needs to be paid.
The Pew Charitable Trusts works in this field with no hidden agenda. We believe every public employee — past, present and future — deserves a secure retirement, and that begins with paying for the pension promises already made. Going forward, we need an honest discussion centered around a fair set of solutions that will offer retirement security to public workers while protecting taxpayers and maintaining the ability of states to deliver important public services.
Director, Public Sector Retirement Systems
The Pew Charitable Trusts