An article in last Monday’s New York Times reported what some of you already know: the promise of a pension is ending in America, as healthy private companies like Verizon, IBM, and Motorola join the distressed steel, airlines, and auto parts industries in rethinking retirement benefits.
Some private companies are scaling back their pension plans or freezing them. Others are replacing them with 401(k) plans. Still others have thrown themselves into bankruptcy and turned their pension plans over to federal regulators.
According to a story on the CBS Evening News, state and local government pension funds across the country are underfunded by $450 billion dollars. The story predicts services will have to be cut and taxes raised to pay down the deficits.
The City faces the same pressures. The City’s contribution to the City’s relatively generous retirement systems has risen to $27 million this year, from $7 million in 2001. That increase, fueled by a variety of escalating costs, has limited the City’s ability to give current employees decent pay and put great pressure on our ability to maintain and improve city services.
It is my goal to fix the pension problem without raising taxes on residents and businesses, laying off City employees, or cutting services to City neighborhoods. City officials and employees are already considering a variety of initiatives to stabilize these systems.
It will not be easy or painless, but it has to be done.