Blog User J, whose recent email follows, asked a question that we field every so often:
Jon:
You wrote: "All of the pension-change plans in play would alter guaranteed benefits for future employees and increase the out-of-pocket contribution costs for nearly all current workers."
I think the proposal by Brown would require current workers to pay "the equal share of the normal cost of the system." That is 14% which would require workers to pay 7%. We currently pay 8% and the buzz is that under Browns proposal we'd actually get a 1% decrease.
What do you show?
Without a bill to analyze, it's impossible to know what language might emerge to shape the law. In his State of the State address last week, Brown encouraged the Legislature to use his plan as a starting point to pass "real" pension reform. Who knows how that legislation will read?
But if you look at the 50-50 split piece of Brown's October proposal, it leaves room for some government workers to pay more than half of normal pension costs. (SEIU Local 1000's contract, for example, includes the kind of split that Blog User J described.)
Equal Sharing of Pension Costs: All Employees and Employers.
While many public employees make some contribution to their retirement - state employees contribute at least 8 percent of their salaries - some make none. Their employers pay the full amount of the annual cost of their pension benefits. The funding of annual normal pension costs should be shared equally by employees and employers.
My plan will require that all new and current employees transition to a contribution level of at least 50 percent of the annual cost of their pension benefits. Given the different levels of employee contributions, the move to a contribution level of at least 50 percent will be phased in at a pace that takes into account current contribution levels, current contracts and the collective bargaining process.
Regardless of pacing, this change delivers real near-term savings to public employers, who will see their share of annual employee pension costs decline.
Those two words, "at least," leave room for some state and local government workers to pay more of pension costs than their employers.
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