It?s great news that Baltimore County is considering raising the retirement age for current and future employees and reducing benefits for new ones.
It must if the state?s pension system is to remain solvent. The state estimates its overall cost of providing health care benefits alone as of 2005 for state retirees to be $20 billion.
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County Executive Jim Smith estimates the county?s overall liability for health and insurance benefits to be about $2 billion.
The proposal being circulated would raise the retirement age to 65 from 60 for existing employees and to 67 for those hired after July 1. A discussion about it is scheduled for employees Feb. 7. Other proposed changes include requiring new employees to work 10 years before they become eligible for benefits instead of five, and lowering the overall benefit, according to documents obtained by The Examiner last week.
The bad news is that it does not include all county employees: Police, firefighters, elected officials and department heads would not lose any benefits. Another problem is the fact that benefits will be based on the highest 36 consecutive months of work ? almost always final years. That encourages employees to wangle ways to rack up overtime in their waning years, driving up pension costs.
In Baltimore City, police have already used up overtime for 2007 ? a chronic problem that ultimately will force city taxpayers to pay unanticipated and high retirement benefits. That issue could be solved by better management and proper budgeting for full-time employees. But the bigger issue is the plan itself. Most private sector workers years ago lost generous defined benefit programs like the ones 90 percent of all government employees nationally receive. The vast majority finance their own retirements by contributing a set amount to 401(k) plans each month. The switch came because employers could no longer afford to pay benefits indefinitely for former retirees. With life spans increasing, people who retire at 60 in a few years could expect to live 30 or more years after they quit their jobs. Sure, government employees contribute to their retirement each month, but they are part of a tiny minority guaranteed benefits for perpetuity.
Is it fair to make taxpayers finance retired government workers for that long when 80 percent of them do not receive such generous benefits?
We don?t think so. The best alternative for Baltimore County would be to adopt a defined contribution plan ? for all employees, not just new ones ? like the majority of those in the private sector. The average citizen should not have to work until 80 so that government employees can retire at 60 or 65.
