RSI Board Member Dan Liljenquist and Executive Director Pete Constant this week participated in a panel discussion on pension reform in Lansing, Mich., sponsored by the Mackinac Center. The panel, How Pensions are Bankrupting Cities and States and How o Fix It, looked at repeated underfunding of pension systems in Michigan and across the country that have led to a national crisis. Also on the panel was Michigan State Representative Aric Nesbitt.
Liljenquist started off the panel discussion by saying that the first goal of any pension reform must be to meet the promises made to employees. "The second goal is to create sustainable systems for new employees," he continued. "And the third goal to is to ensure that those new systems provide adequate retirement security."
Allowing massive pension debt to continue to go unchecked will hurt employees the most, Constant emphasized. "Pension debt has a huge impact on workers and retirees," he said. "What happens when retirees are 75 or 80 years old and need their pensions the most and the pensions are dried up?"
Pension reform is also in the best interest of taxpayers, Constant continued, because they are continually paying more in taxes and getting less services.
According to both Liljenquist and Constant, a primary reason for the nation’s massive pension debt is because pension systems haven’t adapted to changing financial markets. "What worked in the 1980s and 1990s doesn't now," said Constant. "Yet, pension plans continue to keep their heads buried in the sand. Fifteen years of poor performance is not an anomaly."
Watch the entire presentation below.