Two wrongs make a right?

Pretty good deal for the public sector

In 1983, hungry for cash, government raided employees’ collective retirement fund and, when the time came to re-pay debt, raised taxes to boost contributions to the fund, cut retiree benefits and increased the retirement age of those eligible for the fund.

Sound like the current proposal to deal with Maine Public Employee Retirement System debt?

Wrong.

It was Social Security.

So, to every public employee who — in the past several weeks — has said out loud or thought to themselves that private-sector employees haven’t suffered or aren’t paying their share, they have and they are.

Gov. Paul LePage has a strong proposal before the Legislature to tackle the crushing unfunded actuarial liability, or UAL, in MainePERS. The plan calls for public employees to contribute an additional 2 percent of their salaries to the retirement fund. The plan also raises the retirement age from 62 to 65 years and freezes their cost-of-living adjustment for three years.

Sound familiar?

Private-sector employees are familiar with nearly identical changes made in Social Security years ago. And there are almost certainly more changes coming soon to make Social Security even less generous.

Public employees argue that the governor’s plan is unfair, that the state made a promise to fully fund their retirement and Maine is obliged to honor that promise without burdening fund members.

Social Security promises were equally sincere when offered and equally vilified when broken. And, yet, broken they were because the fund was running dry and the beneficiaries were forced to pay.

We can blame politicians for raiding these funds and blame unstable markets for compounding debt, but the simple fact is that Social Security contributors were taxed to repair that fund and it does not seem overly cruel to propose that contributors to MainePERS do the same.

In Maine, public-sector employees currently contribute 7.65 percent of their earnings to PERS. Maine taxpayers — public employees included — contribute another 5.5 percent of the annual public payroll to PERS, plus 14.6 percent toward the UAL.

According to the governor's office and PERS staff, money contributed to individual retirement accounts is dedicated to those accounts. Whether public employees contribute 7.65 or 9.65 percent, it all goes back to beneficiaries. The additional 2 percent payroll contribution proposed in the governor's budget will not drift off to the general fund as has been suggested by opponents of the plan.

If public employees contribute an additional 2 percent, then Maine taxpayers can reduce general fund contributions by 2 percent, using that savings to pay other costs of government, which might just reduce everyone's tax burden.

The prospect for public employees under the governor's proposal is that they could put away more for retirement and save more of their own tax dollars now being spent to pay the crippling UAL. That sounds like a pretty good deal, and better than the retirement prospects for private employees.

Upon retiring, vested public-sector employees are guaranteed 50 percent of their highest three years' average salary. Social Security doesn’t pay close to that percentage, so the privately employed must contribute additional funds to personal retirement accounts to achieve a livable retirement income or risk the very real possibility of poverty in their twilight years.

Talk about pain.

The governor’s proposal also raises the retirement age of public employees to the retirement age of Social Security recipients, a parity that seems reasonable. But, public employees say being forced to work longer is punitive.

We’ve heard that teachers, in particular, ought to be permitted to retire early with full benefits because mental and physical exhaustion that comes with age is not good for students.

Who is it good for?

Being old and tired is a pretty good equalizer and to suggest that private-sector employees are expected to work for more years than those in the public sector is a ridiculous double standard.

Private-sector retirees have seen their COLA frozen for the past two years and their share of health insurance climb. So, that public sector employees are now facing the same reality is, perhaps, due. Maybe even overdue.

Public and private employees all rely on retirement systems that have been raided by politicians and compromised by an unstable market. Gov. LePage's proposal gives public employees an opportunity to tuck away more of their own money and save millions in public tax dollars.

Sounds like a fair deal.

jmeyer@sunjournal.com

The opinions expressed in this column reflect the views of the ownership and editorial board.

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This fact can't be ignored:

Currently, teachers pay 7.65% of their salary to MEPERS and 1.45% to Medicare for a total of 9.1%. Governor LePage’s proposed budget would increase the total employee contribution to 11.1%. Private sector employees pay only 7.65% for both Social Security and Medicare.

"the privately employed must contribute additional funds" So must the public sector employee. Presently in Maine, the public sector employee is paying 1.45% more, and if governor LePage's plan is implemented, public employees will be paying 3.45% more than the private sector employee.

"Upon retiring, vested public-sector employees are guaranteed 50 percent of their highest three years' average salary. Social Security doesn’t pay close to that percentage, so the privately employed must contribute additional funds to personal retirement accounts to achieve a livable retirement income or risk the very real possibility of poverty in their twilight years."

Private sector employees are eligible for Social Security benefits PLUS pensions offered by their employers. Combined, their retirement benefits far exceed those receiving a benefit from the MEPERS for comparable job descriptions and responsibilities.

Public school teachers cannot collect a Social Security benefit. Their retirement benefit is limited to the MEPERS. In the MEPERS, "50 percent of their highest three years' average salary" is an attempt to make the public sector employee's benefit comparable to the private sector employee's.

"Private-sector employees are familiar with nearly identical changes made in Social Security years ago. And there are almost certainly more changes coming soon to make Social Security even less generous.

Public employees argue that the governor’s plan is unfair, that the state made a promise to fully fund their retirement and Maine is obliged to honor that promise without burdening fund members."

Because they have no honor in Washington, it's right for them to have no honor is Augusta?

"Private-sector retirees have seen their COLA frozen for the past two years and their share of health insurance climb. So, that public sector employees are now facing the same reality is, perhaps, due. Maybe even overdue."

Members of the MEPERS have seen their retirement benefit REDUCED due to the COLA and their cost of health insurance climb. MEPERS members would have been happy to have seen their benefit frozen.

It's the old "If I don't have it, you shouldn't have it" argument.