The system works. Let's kill it! E-mail
Written by Mark Nichols   

A group of prominent business leaders from Houston whose companies represent $1.5 trillion in assets has launched an aggressive statewide campaign to overhaul retirement for future law enforcement officers, teachers, firefighters, judges and other state and local government workers.

"I think the state needs to get the hell out of this pension business completely," noted lawyer Bill King, during an interview with Kate Alexander, a reporter for a Houston newspaper, the American-Statesman.

Taxpayers bear too much risk on behalf of public employees by providing them a guaranteed retirement that most private sector workers don't get, King said.

Like the similar battle in Wisconsin, negative reaction to the campaign has been intense.

"They don't have to destroy a system that works," said Keith Brainard, the research director of the National Association of State Retirement Administrators.

Brainard added that government pensions provide retirement security for millions of Texans in a cost-effective manner for taxpayers.
Research by the Center for Retirement Research at Boston College shows that professionally managed pension funds produce better investment returns than 401(k)s and cost less to administer.

But Bill King and his group are committed to eliminating pensions for public employees.
King said he would support a constitutional amendment eliminating public pensions in the state and moving all government employees to retirement accounts akin to 401(k)s.

Legislators would have to approve such an amendment on the ballot when they convene in 2013. King noted that he is confident the campaign will soon force lawmakers to take a hard look at public employee pensions.

With a pension, also known as a "defined benefit" plan, the employee and employer both contribute to a professionally managed investment fund.

Upon retirement, the worker draws a monthly check until death. The average annual annuity in the Employees Retirement System of Texas is around $17,500. The alternative "defined contribution" plan puts the risk on the employee to invest the money.

The account is portable for the worker, but there is no guarantee of income throughout the retiree's lifetime.

Bill Miller, a prominent Austin political consultant and lobbyist who represents employee pension, said he doubts that pension reformers will be able to make it a major issue in next year's legislative elections.

"But if they do," he says, "there are 2 million public pension members in Texas who will stand up and take notice."

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