Government worker pensions should be ended gradually

Maybe the state should applaud the plan announced recently by state Comptroller Sean Scanlon and leaders in the General Assembly to restore the solvency of the Connecticut Municipal Employees Retirement System. The system is run by state government and 107 of the state’s 169 towns participate in it to some extent.

Just like the state government employee pension fund, the municipal pension fund system now is carrying large unfunded liabilities, which have risen from $332 million in 2016 to $1.3 billion today, an increase of 313% in just six years. While to be considered healthy a pension system should be at least 80% funded, in the last five years the municipal system’s funding has fallen from 92% to only 69%.

The reform plan is supposed to reverse the trend toward underfunding as well as to save money for the participating towns. But since the plan involves extending by eight years the time for properly covering the fund’s liabilities, during which inflation may persist and entitle pensioners to higher cost-of-living increases, the plan’s savings may not be as great as projected.

In any case refinancing the municipal pension system is not the pension reform Connecticut most needs. That reform is the gradual extinction of the state and municipal government employee pension systems, since they are no longer necessary to draw people to government work and since they will always be vulnerable to unfunded liabilities that can worsen for many years before they are much noticed and elected officials find the courage to address them.

Of course this doesn’t mean that government employees should go without retirement savings plans. It means that they should be paid well enough that they can finance their own retirement, as most private-sector workers do to supplement their Social Security.

As things are structured now, most government employees couldn’t care less about fairness or unfairness in Social Security or about the system’s solvency. Incorporating government employees into Social Security would bring the system enormous political support, which it badly needs.

A lesser but still shocking cause of state government’s huge unfunded pension liabilities was recently disclosed by a report from the Yale School of Management.

According to the report, Connecticut state government’s pension fund performance from 2017 to 2022 was the second worst among the states, exceeding only North Carolina’s.

The median rate of return on state pension funds in that period, according to the report, was 7.79%, while the return on Connecticut’s state pension fund was only 5.4%. The report concluded that if Connecticut’s fund had performed at the median rate, it would have gained another $5 billion.

The report attributed this underperformance in large part to the state treasurer’s practice of delegating fund management to investment firms of no special talent. The treasurer’s office should have been putting pension fund money into basic stock index funds, avoiding high management fees.

 

Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut.  He can be reached at CPowell@JournalInquirer.com.

The views expressed here are not necessarily those of The Lakeville Journal and The Journal does not support or oppose candidates for public office.

Latest News

Chion Wolf brings ‘Audacious’ radio show to Winsted with show-and-tell event
Nils Johnson, co-founder and president of The Little Red Barn Brewers in Winsted, hosted Chion Wolf and her Connecticut Public show “Audacious LIVE: Show and Tell,” which was broadcast on April 8, drawing a sold-out crowd.
Jennifer Almquist

The parking lot of The Little Red Barn Brewers in Winsted was full on Wednesday, April 8, as more than 100 people from 43 Connecticut towns — including New Haven and Vernon — arrived carrying personal treasures for a live taping of “Audacious LIVE Show & Tell.”

Chion Wolf, host and producer of Connecticut Public’s “Audacious,” and her crew, led by production manager Maegn Boone, brought the program to the packed brewery for an evening of story-driven conversation and shared keepsakes.

Keep ReadingShow less
Marge Parkhurst, the preservation detective

Marge Parkhurst with a collection of historic nails recovered from wall cavities during restoration work.

Photo courtesy of Marge Parkhurst/Cottage & Country Painting Company
Walls still surprise me. If you look hard enough, you can find buried treasure.
Marge Parkhurst

After nearly 50 years of painting some of Litchfield County’s oldest homes and landmark properties, Marge Parkhurst has developed an eye for the past—reading the clues left behind in stenciled vines, forgotten bottles and newspapers tucked into walls, each revealing a small but vivid piece of Connecticut history.

Parkhurst was stripping wallpaper in a farmhouse in Colebrook — the kind of historic home she has spent decades restoring — when she noticed something odd. Three layers of paper had already come off — each one a different era’s idea of decoration — and beneath them, just barely visible under dull, off-white plaster, a pattern emerged.

Keep ReadingShow less
Wings of Spring performance at the Mahaiwe Theater
Adam Golka
Provided

On Sunday, April 19, at 4 p.m., Close Encounters With Music (CEWM) presents On the Wings of Song at the Mahaiwe Performing Arts Center in Great Barrington.

The program focuses on Robert Schumann’s spellbinding song cycle Dichterliebe (“A Poet’s Love”), a setting of sixteen poems by Heinrich Heine that explores love, longing, and the redemptive power of beauty. Featured artists include John Moore, baritone; Adam Golka, pianist; Miranda Cuckson, viola; and Yehuda Hanani, cello.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

New climbing gym planned for Great Barrington

Photo by Alec Linden

A climber explores Great Barrington’s renowned bouldering areas, reflecting the growing local interest in the sport ahead of the planned opening of Berkshire Boulders.

Alec Linden

Berkshire Boulders, a rock climbing gym, is set to open in the Berkshires later this year, aiming to do more than fill a gap in indoor recreation — it could help bring climbing further into the region’s mainstream.

Its co-founders already have their sights set beyond the roughly 2,000 square feet of climbable wall planned for a site off Route 7, just north of downtown Great Barrington.

Keep ReadingShow less
Wind, tarps and trail wisdom: a day learning how to camp smarter

Mat Jobin teaches the group how to use a permanent platform to rig a tent. The privy and lean-to of the Appalachian Mountain Club’s Limestone Spring Shelter are visible in the background.

Alec Linden

A happy day on the trail all starts with a good night’s sleep the night before. That’s local trekking guide Mat Jobin’s mantra, and he affirms that a good night’s sleep is possible even if it has to be on the trail itself – with the right preparation, that is.

Jobin, of Simsbury, Connecticut, is a 16-year professional guide and the founder and owner of Reach Your Summit, an outdoor experiences company that promotes self-confidence and leadership skills through a variety of excursions and educational workshops in the forests of New England. On Saturday, April 11, Jobin hosted the inaugural Campsite Selection & Skills workshop just off the Falls Village section of the Appalachian Trail.

Keep ReadingShow less
Grandmother Moon: Wunneanatsu Lamb-Cason book talk in Torrington
Wunneanatsu Lamb-Cason (Schaghticoke/Ho-Chunk), an educator, traditional storyteller and author, will read from her new book Grandmother Moon, inspired by her grandmother, Indigenous educator Trudie Lamb Richmond, who lived on Schaghticoke land along the Housatonic River in Kent.
Provided

The story comes full circle when educator, traditional storyteller and author Wunneanatsu Lamb-Cason (Schaghticoke/Ho-Chunk) comes to Litchfield County to read from her new book, Grandmother Moon, inspired by her grandmother, Indigenous educator Trudie Lamb Richmond, who lived on Schaghticoke land along the Housatonic River in Kent.

On Saturday, April 18, from 2-4 p.m., the Torrington Historical Society at 192 Main St. will host the book talk and sharing of traditional stories.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.