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World-Herald editorial: Get pensions under control

World-Herald editorial: Get pensions under control

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By now it’s hardly news that Omaha, like many cities, has trouble managing the costs of public pensions, be they fire, police or civilian.

It should surprise few that a public with almost no access to pensions has little appetite for paying more in taxes for benefits they will not receive.

And it only makes sense that people chafe at the lucky few allowed to retire so young that they can earn both a city pension and a city paycheck.

So it is easy to understand why Mayor Jean Stothert is hearing positive public feedback in her push for more changes to city pension plans.

Some are needed.

Luckily for Omaha, its employees and taxpayers, it sounds as if the city will benefit once again from public employee unions that are constructive in pension dialogue instead of intransigent.

The city’s police and fire unions took steps in recent years to ask more of their members in benefit cuts and contributions. For that, they deserve credit, even if more might need to be done. Civilian unions also have been willing to help.

That’s vital.

These plans are costly: Median spending on pensions among the top 250 American cities rose to 10 percent of general budgets in 2012, up from 7.75 percent in 2007, the Wall Street Journal reports.

Many cities facing the most difficult situations are in places people would assume, including Pasadena, Calif., at 43 percent, and Springfield, Ill., at nearly 25 percent.

Omaha’s pension contributions were more than 12 percent of the city’s general operating budget in 2012, up from 9.5 percent in 2007, the city says.

Public buy-in for public pensions rests on the assumption that these benefits are needed to help employees avoid poverty and discomfort in old age. (Many public employees, after all, won’t get Social Security retirement benefits.)

But some employees undermine public support when they take advantage of a system that allows them to retire young enough to take another job.Some young hires for the police and fire departments are eligible to retire as early as age 45, though both the city and the unions say the entry age of the average officer, firefighter and paramedics makes that rare. Civilians can retire as early as 50, though also unusual.

That the city often rehires retirees while also paying them a pension and requires no contribution from their new salary to pension funds is bad public policy, bad for the pension funds and bad for current city employees who hope to retire.

At more than 100, the number of City of Omaha retirees still working for the city while earning a city pension was staggering when reported by The World-Herald’s Matt Wynn and Cody Winchester.

Current workers should be furious that so many rehires don’t contribute to pension funds, a situation the police department got right with its DROP program to retain older officers.

If experienced employees are so valuable, perhaps they shouldn’t be allowed to retire so young, perhaps their pensions should be delayed if they return to the payroll, and perhaps they should be required to contribute to pension funds if working.

Still, such double dipping is a symptom, not a cause of the problems. The cause that needs to be addressed first is the retirement eligibility age of city employees — far younger than most private sector counterparts and younger than even Social Security’s minimum retirement age of 62.

Many of the city’s pension problems could be improved by setting more reasonable retirement ages, based on job requirements and the safety of employees and the public.

Even fields that favor younger people, such as police work and firefighting, can find good uses for experienced employees into their 50s. Letting public employees retire so young threatens the politics of all public pensions.

Already the mayor is discussing a shift toward cash-benefit plans, a sort of hybrid between traditional pensions and 401(k)s. Those discussions are not out of left field and could be worth a look.

The key here is what’s best for taxpayers, the city and employees. People have known for dec- ades that reliable retirement plans helped government agencies hire and retain good workers while paying them less in salary.

But early retirements were concocted as ways to save cash now and pay later, in the days when public salaries weren’t nearly as competitive as now. As such, they should be revisited.

Reasonable public retirement programs can be salvaged, altered in ways that improve their fiscal footing. And serious reforms can help restore the public’s trust in plans now foreign to many.

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