Are Pensions Worth It?

   I began my career in the fire service at 22 years of age. Therefore, to say that I had a great understanding of life and how it works would be a serious stretch.

    One thing I have noticed over my career is that in America, pensions are a lot like gambling. For those who have been lucky to reach retirement during good economic times, it has worked out for them. Their 401k's were moved out of the stock market at just the right moment. But what of the many who haven't been so lucky? The many who have approached retirement age during an economic down cycle? What about them? What about those who have retired confidently only to find out the company paying their pension was now folding up shop? What about them? What about the many public employees, myself included, in state retirement systems the taxpayers fund? These have been historically safe retirement plans, but now we are learning that even these come with great risks. Among those risks, the potential the taxpayer may not have the money to sustain such a system.

    While we watch the debate unfold before us between the public and private sectors, it is only natural for us to get caught up in it. After all, we do have a vested interest in its outcome. But as each side continues to fight for its own survival in acquiring what it needs, the real issue becomes clouded. The real question ignored. Are pensions even worth it? I do not believe that they are.   

    In early February of 1775, Benjamin Franklin wrote, “They who give up essential liberty to obtain a little temporary security, deserve neither liberty or security.” From this, I have learned that I am responsible for myself. The successes and failures I experience throughout life from the time I leave the care of my parents, until the time I die, are my own. What I have also learned is that anytime we give away any part of that responsibility, we assume risk. These risks however, have appeared to pay off for the last few generations. Risk though, inevitably has a downside. A downside that conflicts with what we have been told for years. Throughout my career I have believed that if we ‘invest’ our money in the company we work for, or in the state run pension system, for twenty years or more of labor we could then draw from an account that has been managed in our behalf. This account would sustain us throughout our lives or until it runs dry. This whole system has led to a fundamental change in American behavior. We have become less independent and less frugal, and in turn, become more dependent on the companies and governments we work for. We have effectively given up some of our freedom for ‘security’.  We can see clearly now that those who have done that have neither.  That is why the words of Benjamin Franklin have endured for so long, because they ring true.

    Now that the failures of these systems are laid bare in front of us, it gives validity to some other words that have proven to be true. “But let each one examine his own work, and then he will have rejoicing in himself alone, and not in another, FOR EACH ONE SHALL BEAR HIS OWN LOAD “ emphasis added. (Galatians 6:4-5)

    If I had known then what I know now, instead of a pension system, I would have wanted that money in my salary, to secure my future, as I deemed appropriate. However it was I invested, whether it was real estate, the stock market, or under my mattress, it’s my choice, and I alone bear the responsibility for that choice. If I didn’t understand the stock market and choose to “trust” someone else to do it for me, then that choice of trusting someone else rather than educating myself is still my choice and I bear the responsibility.

    The reality is I did not know then what I know now, so what are we supposed to do? A reformed drug addict, who teaches his children not use drugs, may in fact be a hypocrite, but it does not make him wrong. Learning from our past mistakes and trying to fix them for the future may make us hypocrites, but it will not make us wrong either.

    To quote an early 1990’s movie, “we have been hoodwinked, bamboozled, lead a stray” this system will not sustain itself. That does not change that we have “invested” our money into these systems and we trusted that it would be there. We worked honestly, and fairly and do deserve what we have rightfully earned. It may be to late for us, but not for our children. We must teach them to be frugal, and to save, and to be responsible for themselves. I do not have the answer for what to do about us yet. This is the discussion we need to be having, not trying to protect what we have at all cost.

   According to the US Department of Labor’s (USDoL) Bureau of Labor Statics (BLS), in 2010 less than 12% (11.9%) of the wage and salary earners in the US were represented by a union. As a work force public employees were unionized at much higher rate than the private sector, 36.2% versus 6.9%. An important fact to point out here is that it is only for wage and salary earners, meaning it does not represent the unemployed, currently 8.9%, or those who are self employed. So what does the USDoL say about self employed Americans? According to the USDoL’s Office of Disability Employment Policy (ODEP) the self-employed are the small business owners and represent 99% of all employers and 52% of the private- sector work force.

     What is it we should extrapolate from this data? It shows that as union members we are a very small portion of our society and of that small portion, we are mostly public employees. When you do things like our labor leadership is doing in Wisconsin, we are not standing against some “evil corporation” we are standing against our neighbor, our fellow Americans. Our fellow American who is already crying out about being taxed too much, who is already watching their dollar pay for less and less. You are standing against your neighbor and saying, screw you, pay me. This is not a path to victory; this is not even a path that will secure what it is you are fighting for.

    As we move forward in an honest discussion without all the hyperbole and scare tactics I suggest a few guidelines. What ever we decide to do, we cannot pass debt onto our children; reforms must be based in personal responsibility, and if there is pain to be suffered let it be on us and not our children.