Politics and pensions

September 28, 2011 

Earlier this year, heated words about state pension plans paid big benefits to politicians. In Wisconsin and elsewhere, problems - real and imagined - with retirement systems touched off major political confrontations. In North Carolina, the talk was cooler but the bottom line from some Republican legislators was clear: The state should move to a "defined contribution" system, like the 401(k) plans that many private-sector employees have, instead of its traditional "defined benefit" pensions.

Now, a third consecutive study this year (this one from the legislature's Program Evaluation Division) has concluded that the pension plan for teachers and state employees doesn't require a major overhaul. The plan is well funded and pays relatively modest benefits. So legislators here should tone down talk of sweeping change.

Instead, if they're looking for a pension horse to ride, legislators might mount a serious study of their own retirement benefits, which, to employ a bit of business-speak, could use some serious right-sizing.

Earlier this week, USA Today examined legislative pensions in states around the country. Our General Assembly didn't escape mention. Turns out that in a couple of ways - and surely these practices are traceable to past decades of Democratic control, not to the recently dominant GOP - North Carolina's part-time legislators enjoy an edge over regular state workers.

For one thing, we're one of just eight states that define legislators' compensation, for retirement plan purposes, as including expense allowances, which can range up to $559 a month. Retirement calculations for other state employees explicitly omit expense reimbursements.

Also, USA Today said, legislative pensions here are based on a higher percentage of salary than are state workers' pensions, and legislators can collect them while still in office (something most state employees can't do).

Sounds like special treatment, and it is. In fairness, North Carolina legislators don't bring home big bucks from Jones Street - the annual salary is just under $14,000, plus per diem pay of $107 - either at work or in retirement. But when legislators urge a profound and quite possibly detrimental change in the system that so many state workers rely on for their retirements, those legislators should be uncomfortable, to say the least, in speaking from a position of pension privilege.

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