A fascinating exchange picked up Friday by the Colorado Independent, we didn’t want to miss:
Over the course of his first year in office, Colorado Treasurer Walker Stapleton has targeted the state’s public-employee pension plan, known as PERA, underlining its billions of dollars in liabilities and arguing that it should be reworked to reduce the state’s obligations in part by giving over money to contributors to invest themselves. He brought his case to the state’s House Finance Committee on Thursday and predictably ran up against deep Democratic skepticism…
Rep. Daniel Kagan (D-Englewood) lead the opposition to the bill and went back and forth with Stapleton during the hearing.
“Would you like to see us offer a choice even if we knew that it would increase the unfunded liabilities of PERA?” asked Kagan.
“Sure,” Stapleton said, adding that having to reduce PERA’s solvency is “not a happy consequence” of the proposed policy change but worth it if it meant more members of the retirement plan would win the choice to “determine their own retirement futures.” [Pols emphasis]
Kagan suggested Stapleton was putting economic ideology over the obligation of his office.
“I am shocked that you as the treasurer of the state of Colorado would say, as you just said, that to you the concept of giving the consumer choice is more important than making sure that PERA is fully funded.”
This statement from Treasurer Walker Stapleton came during a debate in the House Finance Committee over House Bill 12-1142, which would have opened up the choice to PERA beneficiaries to invest in a “defined contribution” plan, more like the private sector’s 401(k) plans than the “defined benefit” pension plan many public employees (and in many cases, your parents and grandparents in the private sector) enjoyed. While there is possible benefit to taking control of one’s own retirement investments, the recent recession’s wiping out of market equity, including the 401(k) savings of millions of Americans, vividly illustrates the risk.
Since most retirement plans offered by the private sector have ditched defined benefits in favor of 401(k) plans, in a way PERA reminds private sector employees what they’ve lost. The real worry, of course, is that the “choice” is a slippery slope to no choice. The move from defined benefit to defined contribution plans means, by nature, the shifting of risk from guarantors of benefits to individual investment choices. Some will thrive, others will eat cat food.
No matter though, risk is not a problem for Colorado’s chief financial officer! Stapleton would rather see risk, to individual retirees or even increased liability for the state as a whole, than protect the current system. Because providing choice to employees to “determine their own futures” matters more than anything–including either retirees’ or the state’s solvency!
We honestly didn’t realize Stapleton was such an ideologue about this stuff.