The Pension Problem

So we've promised our public employees pension packages that were supposed to be funded with profits from AAA-rated, regulator-approved investments.

Oops.

The Town of Amherst (and Hampshire County and just about every other public pension system around the country and the world) has a big, looming pension problem. Last week at Town Meeting we were urged by the chair of the Select Board to support a bill that gives towns ten more years to fully fund their pension plans (from 2030 to 2040).

I'm a "pull the band-aid off fast" kind of guy, so my first reaction is that's a bad idea. If we've promised benefits that we can't afford, well, tough cookies! A promise is a promise, and we should cut spending now to ensure we can fulfill our long-term obligations.

But the very fact that this is a widespread problem makes me wonder what is really going to happen. It is great to be fiscally responsible, until you're forced to take your hard-earned savings and give it to your irresponsible neighbors.

So I wonder: maybe Massachusetts should push off the day of reckoning until 2040. If I had to bet, I'd wager that the next major financial crisis and Federal bailout will involve public employee pensions, and I'd wager that the more irresponsible states (California, I'm looking at you) will benefit more.