Wisconsin Pension Lie Exposed




Given the effort by the Governor of Wisconsin to dismantle the state employee union collective bargaining rights, a story that appeared in the well-respected Forbes magazine web site entitled “The Wisconsin Lie Exposed – Taxpayers Actually Contribute Nothing to Public Employee Pensions.” Written by Rick Ungar, it makes for some insightful reading.

Ungar, a Southern California attorney and consultant on health care policy and politics, dispels the perception that the taxpayers fund public sector retirement benefits. His perspective is that it is the employees who fund those benefits, by foregoing what would otherwise be an increased direct salary and instead accepting deferred income directed to a retirement plan. Given that the media, in reporting the compensation of public officials includes the cost of benefits as part of the total picture, Ungar’s perspective does seem to have some logic.

Yes, it can be argued that the taxpayer pays the salaries of public employees so the taxpayers also pay the costs of the retirement benefit. But, in a retort to an e-mail post Ungar states that to view it that way one would also have to suggest that a monthly payment into an employee retirement plan by the public sector employer is a gift of some kind, and that is no truer than saying their salary is a gift.

Let’s see. An employer and employee contribution to a 401K defined contribution retirement plan is a pre-tax, deferred income contribution to be collected at a later date, hopefully with interest. Is a contribution by an employer and employee to a defined benefit plan really any different? Seems to me it is not. One must recognize that the later however, like an annuity, guarantees a set benefit regardless of how well its investments do.

So, if the Wisconsin lie is not the real reason that the Governor there seeks to pretty well dismantle the public sector unions’ bargaining rights (except for that of law enforcement), what is the real reason? More on that in a later post.

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About Over But Not Out

A retired Orange County employee, and moderate Republican. The editor seriously does not know OBNO's identity as did not the former editor, but his point of view is obviously interesting and valued.