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|Subject: Re: Proposal to end public pensions||Date: 7/10/2013 10:21 PM|
|Author: ptheland||Number: 428427 of 514535|
Senator Orrin Hatch of Utah has been studying the public pension problem for the last few years. Yesterday he stepped to the floor of the Senate and proposed a RADICAL change to the current system.
We already have a solution to pensions, and have had it for almost 40 years. It's called ERISA. Amongst many other things, it requires employee retirement funds to be set aside in a trust that is not available to the employer's creditors. And employers can't borrow from their pension funds (1).
The one fly in the ointment is that public pensions were exempted from ERISA. So rather than writing a bunch of new laws and regulations, it seems to me that it would be simpler to remove that exemption. Make public retirement plans subject to the same laws as private retirement plans.
I'd even hazard a guess that there were some transition rules baked into ERISA to deal with the transition from unfunded plans to ERISA's funding requirements. Those could be dusted off and used again for the public plans.
(1) Technically, anyway. But they can pay for the "right" actuaries who use unrealistic assumptions about the plan investments, thereby lowering the current required contributions.
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