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Tuesday, March 1, 2011

Public Employees' Contributions To Pensions

A Comment - Channel 3000 - Reality Check: Public Employees' Contributions To Pensions (credit to reporter Jessica Arp) - David Cay Johnston

I wrote the following comment and received a polite reply promptly by email from Channel 3000!

"Thanks for your feedback. We do appreciate all input, and it does help us shape our news coverage. Obviously, who pays for state pensions is a complex and important issue.

Again, thanks for contacting us."

Below is what I wrote to Channel 3000!

This report needs refinement if not correction!

First it says that all contributions to state pensions is taxpayer money.  You do leave wiggle room by saying most state employees!  Consider those staff or faculty at the UW-Madison funded entirely by private foundations.  The pension contributions are not taxpayer monies.  A similar argument could be made for Federally funded work.  The latter is true for many state agency employees. 

Second, how are private sector pensions regarded (and a few exist)?  The rules vary but either by retirement or separation one usually gets some amount that will be taxed (as deferred income)!  In other words unless corporations declare bankruptcy (a technique used by many) they have to give you your money and it becomes a taxable event, thus again it is deferred income.  Is the deferred income "corporate or shareholder" money not the employees?

"But it is also inaccurate to say that employees "contribute 100 percent" toward their pension, because that money is taxpayer money and part of a compensation package that could be bargained or, in this case, taken away."

Taken away, shifted, reduced is a word game ... your logic simply is not correct!  The private entity or state is simply acting in fiduciary manner to safeguard the employee's income (whether the tax is deferred or not).  A safeguard that is shifted to the individual by IRAs, etc., much to their chagrin.  David Cay Johnston has it correct and public sector employees are going to have less income to buy bread and Governor Walker has imposed a pay cut but not reduced the eventual pension benefit.

WI 1848 Forward: 47% Others & #Public Employees' Contributions To #Pensions

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