Problems and Issues in Public Employee Retirement Systems: Comment

Abstract

Mr. Bleakney's article' is most worthwhile, not only because it focuses attention on some of the major problems facing public retirement systems today, but also because to a large extent the same problems may also apply to private pension plans. In short, the issues he discusses are pertinent to the pension field as a whole, and as such should be of vital concern generally. Most practitioners in the field of government retirement systems have become very much aware of the continual pressures exerted by public employees, including teachers, for liberalizations in the benefits provided. Their efforts have usually been rewarded by frequent improvements in the provisions of their systems. In jurisdictions where public employees are also covered by social security, the upward trend in the federal coverage, as well as its tilt in favor of the lower-paid employees, has magnified the problems associated with liberalizations in the local system. Under a number of public retirement systems whose members are also covered under social security-but, unfortunately a number that is too low and growing lower-the benefit design reflects the fact that the benefits of the local system were intended, at least initially, to supplement the benefits available under social security. If the acceptance of this concept of supplementation could be maintained, or reinstituted in situations where it has been ignored, the disastrous effects of an uncontrolled effect, to use Mr. Bleakney's term, could be mitigated. Mr. Bleakney's theory is that, as a practical matter, changes in a public retirement system can only be in one direction-toward greater liberalization. This is probably indisputable with respect to any particular employee's total benefit package. But if it can be accepted by the employees, the legislators and the public that the benefit package consists of two integrated segments-the local system and social security inextricably intertwined-then the ratchet concept need not apply to the benefits of both the local system and social security separately. The ratchet effect seems to to be ineradicable from social security; it need not be so in a supplemental