James Quintero of the Texas Public Policy Foundation recently painted a bleak picture of the Texas public pension fund. (“Texas’ $57 billion public pension problem,” Sunday)
Quintero asserted that a June report from the Pension Review Board is an indictment against Texas public pensions, and the fund can only be saved by “massive tax increases or some other painful course correction.”
His assertions not only are false and misleading, but also a gross mischaracterization of public pension funds. His statements are a disservice to the 2 million dedicated policemen, firefighters, teachers and other state and local employees.
The Teacher Retirement System of Texas is the primary source of retirement security for teachers, principals, superintendents, school bus drivers, school administrative personnel and cafeteria workers. It has been so since 1937.
Even though Quintero did not directly address TRS in his article, his comments are most certainly directed at the agency, as it makes up more than half of all covered public employees in Texas.
The crux of Quintero’s argument is that because state agencies like TRS do not have enough money on hand to cover all of the liabilities of pension plans, the agencies are using “wildly unworkable systems.”
Quintero stated that defined benefit plans “run contrary to sound budgeting principles that stipulate that taxpayer-funded programs should be predictable, viable and not reliant upon gimmicks or market conditions.”
Last year, TRS’ investments saw an $18 billion return and paid out $8.5 billion in retiree annuities. The average monthly annuity for our retired educators is $1,995. One out of every 20 Texans is a participant in TRS.
TRS is supported by contributions from the state (taxpayer dollars), active employees and, most significantly, investments. In fact, investments account for more than 64 percent of the value of this $130 billion fund, more than three-fifths of the pension fund’s revenue.
Quintero led his readers to believe that public pension funds like TRS are outdated and a losing proposition, but he couldn’t be more wrong. While many private organizations are moving toward defined contribution plans like 401(k)s to save their owners money, defined benefit plans are blossoming.
Defined contribution plans are much more expensive to manage than defined benefit plans. They waste tax dollars on a more inefficient system.
Also, defined contribution plans for retirees who do not receive Social Security is tantamount to abandoning them entirely, as funds eventually run out after the person retires.
Ninety-five percent of our public school employees do not participate in the federal Social Security program.
Texas and all its educators would have to send almost $2 billion per year to Washington, D.C., if they were covered by Social Security.
As a result of two federal provisions (the Government Pension Offset and the Windfall Elimination Provision), our public education retirees rarely receive Social Security benefits, including spousal or survivor.
The TRS defined benefit plan is a great bargain for the taxpayers of Texas and provides a modest but reliable retirement for our public educators.
Abandoning the plan for public retirees in Texas would create far more problems than it would solve.
We believe Quintero’s time is better spent trying to improve retirement security for all Americans, not robbing dedicated school employees of a benefit they have paid into their entire career.
Tim Lee is executive director of the Texas Retired Teachers Association. firstname.lastname@example.org