align=”center”> Audio Recordings of the 2007 DB Summit Are Available Here
Thomas R. Lussier, President, LGVA, debunked some of the common myths held by the private sector about public sector retirement benefits. He pointed out that public sector workers have contributed generously to their own defined benefit plan systems, and have often accepted lower benefit payouts than many private sector employees covered by DB plans. Moreover, he noted that public sector plans are increasingly funded by investment earnings, not taxpayer dollars, that and many public employees do not get social security benefits when they retire.
Lussier noted that the private sector should consider more than the economic effects and realize their tax dollars help ensure good public service.
On the other hand, Lussier said it would be self-defeating for the public sector to be defensive about the “pension envy” by private sectors workers and it should encourage the same benefits for the private sector. One solution that would be beneficial to public plans as well, is a system where small businesses and the self-employed could “buy in” to public programs, he offered.
Beth Almeida, Executive Director, National Institute, Retirement Securities, agreed that regulations on private sector defined benefit (DB) plans are crushing the pension system when there needs to be a move toward DB instead. She said that regulators should come up with new ideas to leverage public offerings to the private sector. Another idea she offered is to take a fresh look at the setup of multiemployer plans and determine how to make such a system work for separate employers within the same industry, such as airlines.
Solutions to make DB plans more portable for workers would also encourage more DB’s in the private sector, Almeida added.
Almeida said she believes, in spite of the “pension envy,” private sector workers are smart enough to know that taking away public sector DB plans is not the answer – it will not make things better for them and they know good public sector benefits lead to good public service. Paul Cleary, Executive Director, Oregon Public Employees Retirement System (OPERS), added that the reaction by taxpayers to the ups and downs of OPERS funding and benefits situations provided an example that the private sector just wants reasonable benefits from public plans that are enough to ensure good service. Public plans need to realize their inefficiencies and correct them, he said.
James J. Barrett, Sr. Managing Director, Global Head of Business Development, Bear Stearns, said the way to do that is to design public DBs so that workers cannot get more income in retirement than they received while working and so that benefits increase uniformly. Barrett added that public plans should practice full disclosure and incorporate a shared burden for funding.