The Secret Order of the New York State Pension Fund
And the Martyr Generation
As if we were awakening from a sleeping disorder, we are reminded almost daily of the greed that has permeated our society in the last few years. The footprint of such greed, however, runs deeper than the latest disgraceful actions of a few bankers and financial services executives. It is, in closer analysis, a result of a generational disregard for simple standards of morality and a moderate sense of justice. I am referring, of course, to the Baby Boom generation, who carefully orchestrated this Machiavellian society in the obscurity of the Cold War, later on shoring it with those it mentored: the spurting GeneXers. In the absence of adorable tech-like new qualifiers, the generation now entering the workforce, and perhaps the ones that will follow, should be named the "martyr generation," for they will have to forego stability, perhaps a decent quality of life, to address the multitude of problems and the devastation that both Boomers and early eXers are dropping on their lap. But, what does this have to do with the New York State Pension Fund? Everything.
Reacting to news of revenue losses in the NYS Pension Fund, the word in Civil Service is that both the Executive and Legislative branches of New York State government are considering the creation of a new Tier of employees. This new Tier -- Tier 5 – will see its benefits substantially reduced, including reductions in health and pension benefits and older retirement age. Like the federal government is doing because it was forced to do it to avoid financial chaos, NYS is deferring its obligations to the next generations of workers, all in all to sustain a scheme of benefits that has been irrationally adopted and will be enjoyed by Baby Boomers and early GeneXers. New York, however, does not have to do it.
Over the years, NYS has allowed the NYS Pension Fund, largely managed like a secret society (beyond public scrutiny) to create a series of benefits that, anywhere else in the country or in the world, would be wholly irrational and, let us say it, are driven by greed. The solution to this problem, however, according to the baby Boomers and GenExers that still run the political system in Albany, is not to scale back benefits that are obscene, but to burden future generations with the maintenance of such obscene benefits. Could the system be fixed without the creation of a new Tier and without passing the buck to the next generation of civil service workers? Yes, it could. Here are some of the measures that could restore long-term liquidity in the NYS Pension fund:
- End the inclusion of overtime and other fringe benefits in the final calculation of pensions. The current practice, which allows two different ways of calculating a pension (the average of the three best years of earnings or the year preceding retirement), allows for employees at all levels to artificially inflate their earnings through overtime in the last three to five years of employment or obtain a last minute "promotion" to inflate the salary of the last year of service; this, of course, entitles retirees to pensions reflecting salaries that they never earned nor deserve.
- Establish a pension cap, valued at no more than $100,000.00. No matter what one did for the State or where one worked, if the State is willing to give one $100,000.00 for the rest of one’s life (to which health benefits are added), most people would agree, it’s a pretty good deal. State workers who would have qualified for more than that have earned high enough salaries over their careers to create private savings plans.
- Stop early retirements. Almost one-half of all State workers are eligible for full retirement benefits after 20 or 25 years, regardless of age. This is utterly irrational. Thousands of individuals under the age of 50, and thousands more under the age of 55, retire every year with full pensions. Where else can people retire this early? Nowhere. It doesn’t matter what one does. My uncle worked in law enforcement for forty-two years. After serving on the streets for 25, he worked an additional 17 in the office (back when law enforcement did not need a "civilian workforce" to do paperwork). What’s wrong with that?
- Stop rehiring retirees to their old jobs. Once they retire, let them go. I was told by my boss, once, and now I truly believe it, that no one is irreplaceable. Thanks to loopholes, thousands of retirees are double-dipping, creating an unnecessary burden for taxpayers and blocking younger workers’ ability to advance (and to reform a rotten system).
- Apply greater levels of scrutiny and control to "disability" pensions. The corruption in the award of disability benefits has been somewhat documented, but it seems to run much deeper than we are lead to believe, particularly in law enforcement, corrections and emergency services (who are also the beneficiaries of the greatest benefits under these terms).
- Limit payments to current pension beneficiaries to the maximum pension amount set above. While this may create a few inconveniences, it will not send anyone to the poor house.
- Stop the "packing" of bureaucratic offices with non-existent "managerial" functions, inflating salaries (and later on pensions) in the least productive areas of public service. Most State agencies’ organizational structures now look like mushrooms, with thousands of five-star generals in charge of just a few soldiers. Not only is this irrational, but it also causes an immediate impact in loss of actual public services to the taxpayers (i.e.: have more "street sweepers" and less online information about "street sweeping"). Accountability is good. Too much accountability is stupid.
- Review all the permanent disability claims of the last ten to fifteen years. Prosecute the ones that may be fraudulent and recover pension funds.
The above measures, I am convinced, would reinforce the liquidity of the
NYS Pension Fund, without hurting anyone. Most especially, these measures would not add to the burden – a "gift" of the Baby Boomer generation, in pursuit of endless greed and profit -- which will have to be carried by the "martyr generation" for years to come.