Teacher Pensions Blog

When I was growing up I worked for a family-owned golf course. The owner had a dry humor and a loud voice, and whenever he'd hear a customer on a busy day who didn't want to wait in line ask how to get to a different, competing golf course, he would roar out "YOU CAN'T GET THERE FROM HERE!" and burst out laughing. It was a ridiculous assertion of course. But he wanted to keep his customers, and he didn't want to take time out of his day to explain how someone could back up and go to one of his competitors.

I think about my old boss every time I hear similar arguments about pension reform. A new brief from the National Institute on Retirement Security (NIRS), an interest group representing large pension plans, tries to apply the "You can't get there from here" logic to pensions. Essentially what they argue is that it's impossible to end the current poorly designed defined benefit pension plans in favor of something better. Pension plan funding is so bad, they insist, that we must keep putting new people into it. We simply can't afford to do anything else!

If you take a step back, you realize this is crazy logic. Why would we keep putting new people into poorly funded, poorly designed retirement plans? As Andrew Biggs lays out for AEI, closing a pension plan does not change its unfunded liability. But it does mean we stop creating new unfunded liabilities, and it means new workers won't be subjected to the same, bad plan. We can offer them something better. We can get from here to there