Earlier this summer, the conservative National Review published a piece entitled?Republicans Need to Promise Now: No State Pension Bailouts. The story has many issues, the most fundamental of which is that it articulates opposition to a phantom proposal that no national pension groups are even pushing for.
Thus, the National Review is coming out preemptively against a policy solution that nobody is asking for to a nonexistent problem. In doing so, they are attempting to politicize public pensions and attacking the hardworking firefighters, teachers, and public servants who depend on those guaranteed lifetime benefits for their families’ retirement security. Public servants should not be used as a political football and rhetorically kicked as election-year boogeymen.
Project 2025, the dangerous political initiative developed by The Heritage Foundation, wants to decimate the civil service, putting public servants in the bullseye. Anti-government extremists have already attacked public servants who administer our elections, assaulted the capitol police, banned librarians’ books, and dangerously threatened air traffic safety, outsourcing inspections entirely to Boeing with tragic results.
Heritage wants to go backward–it’s right there in their name. Theirs’ is a full-frontal assault on the humans who run the government day in and day out, middle-class folks who drive the school bus, teach children, and fix them healthy meals. Over the past decade, wise policy changes and increased financial contributions directly from workers’ paychecks have significantly enhanced the cash flow of state pension plans–at the expense of workers’ net take-home pay.
The point is that much of the money that has shored up public pensions has come directly from rank-and-file workers through increased employee contributions—directly out of the pockets of school nurses, social workers, parkkeepers, and community-saving heroes. Meanwhile, millions of public servants have also absorbed substantial benefit cuts since Wall Street caused the Great Recession, accepting a more modest retirement income in exchange for a more secure pension fund, which is measured through an actuarially determined number known as the funding ratio.
The National Conference on Public Employee Retirement Systems 2024 Public Retirement Systems Study?pins the average assumed investment rate of return (what Pina calls terms the discount rate) at 6.91%, compared with 6.86% the year prior, but short of the 7% or higher National Review alleges. In another example, CalSTRS, one of the largest pension systems in the nation, reported a 2023 return rate of 8.4%, well ahead of its investment return assumption of 7%.
This astute management of pension funds was recognized last fall when Pew Research asked, “Are pensions still in crisis?” with the following response: “No state is at risk of insolvency.”
