For Immediate Release
Tuesday, April 26, 2011
“Ancient History and of Limited Use”
Statement of AFSCME President Gerald W. McEntee on the Pew Report on PensionsWashington, DC —
“The latest Pew Report on Pensions, ‘The Widening Gap,’ reflects ancient history, distorts the true state of public pension funds and is of limited use for anyone hoping to make informed public policy. In many cases, the report provides a snapshot of the state of investments on June 20, 2009, which was near the depth of the market. Pension payments have been, and will continue to be, a small part of state and local government expenditures. The 2008/2009 stock and real estate market crash took its toll on all investors. The real story is not the Pew Center's latest snapshot, taken at the bottom of the market, but how well almost all of the retirement systems have recovered. While individual investors are still struggling to grow their retirement portfolios to sufficient levels, pension funds have shown remarkable resilience. These funds are not only persevering, but are well on their way to full recovery.
“The relevance of the report’s findings are undermined by a Standard and Poor’s report last month that found ‘pension liabilities and current contributions are not presently jeopardizing any state's capacity to meet its debt service obligations.’ Since 2003, the average aggregate pension fund earnings have exceeded the typically assumed benchmark of 8 percent every year except 2008, when the market crashed, with devastating results.
“Although the aggregation of pension liabilities makes for some interesting headlines, such information is of limited use to policy makers. Large pension plans in all 50 states are funded by a variety of state, local and school district governments. Some are poorly funded, while the vast majority has been responsibly managed. Only a plan-by-plan analysis could determine the adequacy of plan funding and benefits. The report often mixes apples and oranges and comes up with lemons.
“It is also worth noting that benefits for AFSCME-represented public employees in the major pension funds average approximately $19,000 per year. Member contributions and investments typically comprise approximately 70 to 80 percent of the total cost. The men and women who provide the vital services our communities need are not getting lavish pensions. They earn modest benefits after a career of service.”