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A New Effort Seeks Big Change To Public Pensions In TX

For decades, state, county, and local governments have provided defined-benefit pensions for public employees. The employees are promised a certain amount each month in retirement, based on their salaries and years of service. A Houston attorney says those programs are unsustainable. He's leading an effort to change the way public retirement programs are handled. The goal is to make public employees bear the same retirement responsibilities, and risks, as workers in the private sector.

More than two million workers in Texas, both active and retired, belong to a public pension program. The state’s Pension Review Board says those 363 programs, taken together, are short by about $42 billion — though some plans are in better shape than others.  

Houston attorney Bill King says defined benefit pensions for public workers are a bad deal for the taxpayers, and for the employees.

“The young people that are in these plans today are absolutely never going to collect the benefits they’re being promised to them today.  They’re financially unsustainable.”

King says pensions have been hammered by a combination of deliberate underfunding, a turbulent stock market, and, in some cases, increased benefits.  The former mayor of Kemah is forming a group called Texans for Public Pension Reform.  The idea is to gradually phase out defined benefit pensions in favor of defined contribution retirement plans, like 401(k)s. 

That doesn’t sit well with people like Max Patterson.  He’s the executive director of the Texas Association of Employee Retirement Systems.  He says 401(k)s were intended to supplement, not replace, traditional pensions.

“And you know and I know that 401(k)s will not provide an adequate retirement.  And we all know that Social Security is not going to provide an adequate retirement — even if you add the two together, it won’t.  Then where will the monies come for older people to live off of without having to work until they die?”

Patterson asserts a shift from pensions to 401(k)s for public workers could end up costing more in the long run, especially if the investments of retirees lose value. 

“They’re going to depend on the local government or the federal government, either through food stamps or some other subsidy program to take care of them.  That is not saving the taxpayer money.”

Patterson also believes if pensions were phased out, fewer people would apply for public jobs.  But pension reform advocate Bill King doesn’t buy it.

“If you suddenly went defined contribution, we’d still be able to recruit all the police, fire, teachers we want to today, because all those jobs have waiting lines that go out forever.”

King says he doesn’t have a problem with publicly funded retirement accounts.  But he doesn’t believe public employees should be guaranteed a certain amount in retirement, when most private sector workers are not.

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David Pitman

David Pitman

Host, Morning Edition

Hi there. I’m glad you found me. Let me take a moment to answer some of the questions you might have about me and my job. I have worked as Morning Edition Host and reporter at News 88.7 since August of 2009. Previously, I hosted Morning Edition at WMFE in...

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