Five things to consider before cutting pension benefits

Source: Mark Miller, Reuters, June 20, 2012

The message from voters about public pension plans is clear: They’re ready to cut the retirement benefits of police, firefighters, teachers and other state and municipal workers….

…Pensions are, no doubt, consuming a larger share of some state and local budgets. The bill has come due for years when plan sponsors did not make their full plan contributions; in the years leading up to the 2008 financial crisis, many papered that over by relying on strong stock market returns. Many plans also took major hits in the 2008 crash, and returns have since been hurt by low interest rates.

But – before we continue swinging the axe – here are five things to keep in mind about public sector pensions:
1. Pensions aren’t simply a gift from taxpayers…
2. Many workers don’t get Social Security…
3. Pension underfunding isn’t as bad as you think…
4. Pensions are more efficient than 401(k)s…
5. The retirement crisis is real….

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