By Byron Schlomach, Ph.D.
General Motors is moving 19,000 salaried workers off its pension plan to a 401(k) plan. The move will help reduce the risk GM’s pension poses to the company and investors, including the federal government – i.e., the American taxpayer. GM’s unfunded pension balance is currently $8.7 billion. GM’s profits in 2011 were $7.6 billion.
The new retirement plan makes sense for the company and for employees, who can now take an ownership stake in their retirement savings.
State governments would do well to consider taking similar steps. Arizona’s pension systems have a combined unfunded balance of $16 billion – an official total that is arguably low. State General Fund revenues stand at $8.4 billion, a position far more precarious than GM’s.
Moving state employees to 401(k)-style retirement plans not only makes fiscal sense, but would greatly reduce the risk to taxpayers, who, unlike investors in private companies, cannot simply opt-out of the risk by selling stock.
Dr. Byron Schlomach is Director of the Center for Economic Prosperity at the Goldwater Institute.
Learn more:
Joint Legislative Budget Committee: Historical General Fund Revenue Collections (PDF)
DailyFinance: General Motors Meets on Revenues, Misses on EPS
New York Times: G.M. Changes Pensions for Salaried Workers
Yeah, and what is next, throwing out pensions for the military? Let’s be clear, 401Ks were designed to be a supplemental savings tool, not the main course. Who among the many are really qualified to be fund managers and watch their money? The average working person doesn’t have the financial tools to provide that level of prowness with the money.
Is it fair to ask those on government pensions systems to contribute more? Yes. But let’s do some history lesson here – government pensions were put in place to retain good workers given that government pay is generally lower. I have worked in state service. The vast majority of Arizona government employees are not getting rich. A lot of them are dedicated. Several are in my American Legion Post. Good, competent people who work hard. And none of them would be capable of the ability to adeptly move a 401K around to assure them even a reasonable annual return.
Then there is the issue of all these bright ideas from GI. Nice, but who (plural) are the driving force behind all this research? In the name of Barry Goldwater, who, by the way earned two government pensions, are the folks pushing this and why?
Not for me. And what do we have this “hate the government employee” thing going.
Let me point out some key conservatives and their government pensions:
Russell Pearce – great guy – has three government pensions, including his public safety retirement
John Kavanagh – tight with the dollar – worked as a career cop, works as a community college professor, and is vested in Arizona’s elected officials retirement
There’s two, plus scores of others who are vested in the elected officials retirement. Let’s do this: have the politicians at the state legislature pass a bill this session to end the elected officials retirement and switch it to a 401K and make it retroactive to all current office holders. All of them. State, city and county. Then let’s talk about the rest.
Lead by example.
And finally, where do some of these GI folks come from? After a bit of research, I did not find that Mr. Schlomach is anywhere on the voter roles in Maricopa County, yet all the other online references say he lives in Phoenix. Perhaps I’m wrong, if so, correct me.
Jon, you’re a joke.
No one who lives in the real world for the past 20 years has a pension.
What planet do you live on?
Oberserve, read your own comment. You can do better than that. I know you can because you have done so in the past. Give us the results of your internet research and critical thinking. Inform us instead of simply offering snark.
Snark? You’re a joke. In the REAL WORLD no one who has started in the PRIVATE SECTOR workforce in the past TWENTY YEARS is in a pension plan.
Go back to the moon where you came from you ultraliberal.
There are some very good articles on the internet summing up the pros and cons of pension plans versus 401 (k) plans. Why don’t you make a cogent case for your point of view instead of saying valueless things like this:
“Jon, you’re a joke.”
“What planet do you live on?”
“Go back to the moon where you came from you ultraliberal.”
Are you simply too lazy to do the work involved?
That’s not the point, Liberal American. The point is – IN THE REAL WORLD (i.e. not the government) anyone who has started in the workforce in the last 20 years knows that there ARE NO MORE PENSIONS.
They would laugh in your and Jon Altman’s faces for being elitist ivory-tower liberals attempting to argue for pensions WHEN THEY NO LONGER EXIST.
HAHA.
You’ve revealed who you really are, a “conservative” whose salary is paid by TAXPAYERS.
Next, you will attempt to explain how TAXPAYERS who have NO PENSIONS should pay for your pension.
C’mon, I’m waiting.
Alright, Obserserve, enough of your mouth and insults. You want mouth? Try this!
You’re a hair lipped, pissy faced, banjo bellied Pinko and I wouldn’t piss down your throat if your belly were on fire.
Suck that up, Pinko, as that seems to be the only language you understand.
Have a nice day, Pinko!
I wouldn’t micturate in your rectal void if your gastrointestinal tract was ablaze and I was voiding napalm as I want to watch you slow burn.
You asked for it, JDP. Now you’re going to get the worst insult of all. You’re a Ron Paul supporter! Take that!
Let me reply. I’m glad to make the guy laugh. I do know people who work have been employed since 2000 under defined pension plans in the private sector. I live on planet earth, and unlike the Goldwater Institute writer, I am registered to vote in Arizona.
Oberserve, perhaps if Doctor Bryon Schlomach, Director for the Center for Economic Prosperity, Goldwater Institute was a bit more truthful and a little less political, you would realize he has found the reason for his concern. That being a large majority of non-state workers, covered by the ASRS (Arizona State Retirement System) who retire at 20 years in this real world.
Someone needs to GET A JOB in the real world where the rest of us live. Like I said, no one in the private sector has had a pension if they started in the workforce anytime in the last 20 years.
And you jokers call yourselves conservatives?
Jeez.
Do you know the % of workers in the workforce IN THE PRIVATE SECTOR TODAY with a pension? 5%? 10% at most.
Regardless of “schlomach’s” politics, he’s 100% correct here.
Anyone who claims to be a conservative and states otherwise, go vote for Obama where you belong.
Oberserve says:
February 23, 2012 at 5:08 pm
Jon, you’re a joke.
No one who lives in the real world for the past 20 years has a pension.
What planet do you live on?
>>
you added “PRIVATE SECTOR”
here
Oberserve says:
February 23, 2012 at 10:33 pm
and here
Oberserve says:
February 23, 2012 at 10:31 pm
You’re correct. The private sector is the real world. Government jobs aren’t. Sorry.
I thought this was a conservative blog, not a government workers’ rights blog.
Let me know.
Hey, Pinko, you had better get yourself aligned with the “real world”.
Those who serve in the military and the clandestine services, protecting this country, are in government jobs. If that isn’t real, then why don’t you go to some country where you don’t have the umbrella of people in “government jobs” protecting your sorry butt.
And your favorite Pinko, Libertarian, left winger, Ron Paul, says that we need to “take out” the CIA:
“There’s been a coup, have you heard? It’s the CIA coup. The CIA runs everything, they run the military. They’re the ones who are over there lobbing missiles and bombs on countries. And of course the CIA is every bit as secretive as the Federal Reserve. And yet think of the harm they have done since they were established [after] World War II. They are a government unto themselves. They’re in businesses, in drug businesses, they take out dictators. We need to take out the CIA.” – Ron Paul
But you don’t have to read it, you can watch the video of your favorite whacko nut case speaking these words:
http://www.youtube.com/watch?v=2dECSYm5bSM
So you support a whack job who thinks that we need to take out the CIA. I bet that you and your Pinko friends would just love that, LOL!
Have a nice day, Pinko!
You can say what you want. It does not change the FACT that there are no more pensions in the REAL WORLD (i.e. private sector) and there have not been for anyone who has entered the workforce in the last 20 years.
Nor does it change the fact that your paycheck comes from the GOVERNMENT and you want TAXPAYERS who DO NOT HAVE PENSIONS to pay for YOUR pension.
And you call me a “pinko”? LOL
Why, yes, Pinko. Need glasses, LOL!
I know people who in the last 20 years have gone to work with major employers and they are under a defined pension plan – and not working in government. In both cases, the firms are major firms on NYSE or listed on the S&P 500. And your point is?
Mr. Schlomach, you’re a Doctorate in Economics for goodness sake! Your paper, article, blog post, comment, brief ………… is nothing more than YELLOW JOURNALISM. Stop embarrassing the Goldwater Institute with this crap and fix it – make it right man! I don’t think your employer wants to be represented in such a manner.
Hey, doggie breath, your Ron Paul voted against measures to protect chidren from predators:
Ron Paul: Pro Child-Predator Candidate
Voted NO on establishing nationwide AMBER alert system for missing kids.
Voted NO to mandatory life sentences for two-time child sex offenders.
Voted NO to making visual illustrations of child pornography a crime.
Voted NO to making it a crime to take a trip to a foreign country to engage in illicit sexual conduct with a minor.
Don’t take my word for it. Look up the bill and Pinko Paul’s vote for yourself:
The bill: http://thomas.loc.gov/cgi-bin/bdquery/z?d108:s.00151:
The vote: http://www.ontheissues.org/HouseVote/Party_2003-127.htm
And what was Pinko Paul’s “Conservative” reason for voting against this entire piece of legislation with all of it’s provisions to deter child predation? Well, let’s read Pinko Paul’s words for ourselves:
“However, Mr. Speaker, I am concerned that making the AMBER Alert system a Federal program is neither constitutionally sound nor effective law enforcement. All Americans should be impressed at the demonstrated effectiveness of the AMBER system in locating missing and kidnapped children. However, I would ask my colleagues to consider that one of the factors that makes the current AMBER system so effective is that the AMBER Alert system is not a Federal program. Instead, states and local governments developed AMBER Alerts on their own, thus ensuring that each AMBER system meets the unique needs of individual jurisdictions. Once the AMBER Alert system becomes a one-size-fits all Federal program (with standards determined by DC-based bureaucrats instead of community-based law enforcement officials) local officials will not be able to tailor the AMBER Alert to fit their unique circumstances. Thus, nationalizing the AMBER system will cause this important program to lose some of its effectiveness.” – Ron Paul
So under the pretext of being “Conservative”, Pinko Paul voted against measures to deter child predation because if there is a national, federally run AMBER system it would “cause this important program to lose some of its effectiveness”… because of DC-based bureaucrats. Nut job!
Now if you think that Pinko Paul’s thinking is “Conservative”, you need to get your head out of the Communist Manifesto, slime bag.
So your support of Pinko Paul shows that nothing you have to say is sane and rational.
Have a nice day, Pinko!
What does Ron Paul have to do with the fact that you get a government paycheck?
Maybe that’s why you don’t like Ron Paul, because as president he’d cut your job?
LOL
Perhaps if Doctor Bryon Schlomach, Director for the Center for Economic Prosperity, Goldwater Institute was a bit more white and a little less yellow with his print. You and others would realize he is wantonly misstating the facts for political reasons and of course this is MY OPINION on a political blog and issue.
My issue here is less the pension, more the deceit, lack of character, business as usual where there is less a distinction between Democrats and Republicans and those in between.
My son has a pension plan as does my son-in-law and daughter, they are non-exempt status in the real word and they are all under 30. Their PENSION PLANS, 401k’s rival my government pension plan, my wives private sector real world 401k pension plan blows mine away; she is also non-exempt status as myself.
The issue with Dr. Bryon Schlomach’ little burp is that it’s a cleverly designed fishing expedition – and I’m on the line where his memory should take him back to being called out for his ridiculous testimony on SB 1322 in front of the House Standing Committee on Government on 3/22/11. Bryon, how is Sandy Springs, Georgia comparable to Phoenix, after all you testified that you did “extensive” research. BTW, you needed to have looked beyond what Leonard Gilroy put in front of you to qualify as research as a minimum?
Isn’t there legislation pending this session that reverses legislation from last session that initiated a shift of contributions by ASRS participants from a 50/50 liability to a 40/60 liability (employer/employee)? Go get on their butts Bryon, the ones that want to revert it back to 50/50 – how stupid. Mr. Ph.D., perhaps with your research abilities you can find out who in what legislation session proposed changes to the Arizona State Employee “Merit System” that gutted it. And now Brewer wants to what to the implied employee contracts of state workers? How many state workers, 19,000 out of how many – 260,000?
BTW: the answer to why Ron Paul votes the way he has, currently does and will continue is that he is a constitutionalist, try it sometime, you’ll like it? So anyone who doesn’t support Paul could be considered a pinko, but as Paul and his supporters believe in the constitution – OTHERS have a right to their opinion and to express it, so we’ll all pinko’s.
Proud PINKO Dr. Ron Paul Supporter – JPD
It’s the constitution stooopit
Just more JDP oral flatulence, LOL!
Hey, dip, I don’t work for the government… but our men and women in uniform do as do all of those in our clandestine services. So if you don’t want those people in “government jobs” protecting and defending you, get your sorry butt to some other country.
Conservative American, you forgot the stick after dip and do us a favor and be a little more specific on who you are directing your comments and maybe be a little more coherent.
On the other hand, nothing you do will make you any more coherent than nut case Pinko Paul who said, ” We need to take out the CIA”. I guess he wants to do that because those in the CIA have government jobs.
Have a nice day, Pinko!