Commentary: Time to rethink pensions

This editorial appeared in The State.

It was disappointing, but not surprising, that voters rejected constitutional amendments that would have let state and local governments invest money for retiree health insurance in the stock market.

Disappointing because new federal accounting rules require governments to sock away money that they won’t have to spend for years, even decades. About the only way to do that without reducing government services, increasing taxes or reducing retiree benefits is to take advantage of the higher rates of return the stock market offers long-term investors.

Not surprising, though, because many people have lost faith in financial markets that are now in turmoil — and because no one ran any sort of campaign to explain why the changes were needed, or why voters shouldn't let the current state of the markets dictate the rules under which governments can invest for years to come.

City and county officials, many of whom already were considering cutting back the health insurance benefits they offer retirees as a result of these new rules, will have to scramble to deal with this setback. In the short term, they and state officials should take maximum advantage of the flexibility the rules allow about how quickly these new pots of money must be filled. And the Legislature should bring this question back to the ballot in two years — this time with state and local officials making the case for it to voters.

To read the complete editorial, visit The State.