The Minnesota Taxpayer Association recently responded to the draft pension reform study released on April 1 by Minnesota’s three largest public pension systems. The draft Retirement Design Study is available here. The MTA response is available here.
MTA Raises Issues and Concerns about Pension Study
The MTA response highlights several flaws in the study, including the generous assumption that state and local pension plans should provide retired government employees with 85 percent of their pre-retirement income so they can maintain their “pre-retirement standard of living.”
MTA Executive Director Mark Haveman writes, “We disagree with the implied premise that the state’s defined benefit plans should be designed to meet this objective. Taxpayers should not be expected to guarantee defined benefit retirement income at levels that provide seniors with the lifestyle they experienced during the highest-earning period of their working careers.”
The MTA’s review also points out the “meaningless and misleading” use of average benefit data. The data used skews the numbers since it includes benefits drawn by very short-term state and local employees.
Haveman writes. “The ‘average benefit’ cited includes large numbers of employees who have willingly chosen to enter and leave public service at various stages of their professional careers.” Haveman recommends the use of data related to employees with 30 or more years of service in order to make realistic comparisons.
The final pension reform study is due in June.
category: All Pension Reform, Blog Posts, Budget, Deficit, Public Employee Pensions, Public Employee Unions