Today’s Wall Street Journal highlights the harsh reality facing state government workers and their retirement benefits:
Lawmakers in at least 10 states have voted this year to require many new government employees to work longer before retiring with a full pension, or have increased penalties for early retirement. A similar proposal is pending in California. Mississippi, already among the states requiring more years of service for a pension, is weighing the additional step of increasing its retirement age.
Though lengthening lifespans have been expected to pressure pension systems, the looming fiscal predicament has emboldened lawmakers to demand more years from employees. Also, as many American states cut services, scrutiny has fallen on the compensation of public workers.
Changes to the retirement age won’t solve the most immediate financial problems that now face some public-pension systems, mostly because adjustments generally affect new workers. They aren’t expected to pay off for decades.
But generally, proposals have moved past resistance, partly because they apply to new hires. “People care most about things that affect them immediately,” said Mr. Burnett of Missouri.
In Europe, proposed changes to the retirement age are part of a broad effort to rein in the costs of a social safety net that has long been one of the world’s most generous. Changes would affect workers broadly, not just public workers.
The recent economic downturn has caused strife for state budgets across America. For FY2011, 46 states are on track to spend more than they will take in and will be forced to make tough choices to close their budget gaps. The longer states wait to deal with overspending, the harder and fewer their choices will be.
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