About half of private company employees, and almost every public employee, in the United States are covered by some sort of pension. In fact, part of the traditional lure of the public sector job has been the promise of a pension once an employee retires. The conventional argument has always been that, in a public sector job, an employee trades the short-term possibility for a big salary up front for security in the long term. In private sector jobs, the promise of a pension has always seemed like a bonus — or at least one more perk in addition to an attractive starting package.
Good morning, America! Life is no longer a bowl of cherries. The size and quality of pensions, both in the private and public sectors, is continually up for negotiation. Take Detroit. Once the city filed for bankruptcy in July 2013, a judge threw the action to the negotiation table between the city and its creditors. Now retired public workers and the city have reached a tentative deal whereby, except for police and firefighters, public workers will see their pensions reduced by 4.5%.
In a speech at the New Jersey Chamber of Commerce dinner, embattled governor Chris Christie stressed the need for pension reform for public workers.
Many private employers are criticizing the public sector for not keeping pace with the private sector in trimming pension benefits. Blogger Nick Gillespie mentions that it’s an outright myth that private sector employees make more than public sector employees.
“When you factor in benefits, they make 34% more than private-sector comps. In nearby Michigan, public sector workers make 47% more in total compensation than similar private sector ones. For federal workers, the spread is 45% in total comp. And for the thousandth time: This is comparing similar workers.”
It’s readily apparent that, as the economy continues to weaken, both private and public employers will look to their pension plans as a means of economizing. It’s a matter of common sense. As an employee, you’ll have to consider additional and more inventive avenues for funding your own retirement.