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State and Local Government / Budget and Spending

Positive Pension Changes for Missouri

By David Stokes on Sep 17, 2010

Combest today links to a Post-Dispatch article about changes to the Missouri State Pension system made earlier this year. Briefly, the article states that taxpayers will supply about $5 million less to the fund this year, but the fund is still in a difficult situation overall, primarily because of the economy. Taxpayer funding for pensions is declining because the recently passed rules require new employees to contribute a portion of their salary for their own pensions:

But last summer, legislators revamped the system for new employees — those hired after Jan. 1. They will have to chip in 4 percent of their pay and work longer to draw pensions.

Without those changes, the state’s cost would have gone up by about $20 million next year, officials said.

This is a very good move for Missouri taxpayers. The old world, in which public employees gathered generous pensions without any contributions themselves, is clearly not sustainable. I would like to go further and eliminate public pensions for non-uniformed public employees and move toward defined contribution plans entirely — including a government match. I also think that it is perfectly reasonable to require those already enrolled in the old system to contribute going forward, without losing any of the benefits they had already gained.

I would support maintaining some of the defined benefit plans for the uniformed employees who put their lives on the line for us, but even in those cases I think a required employee contribution is fair. The many issues associated with government pension plans were discussed in depth in this Missouri pension study released by the Show-Me Institute in 2008. As the author, Richard Dreyfuss, asked then:

If certain employee benefit provisions are considered obsolete or unaffordable in the private sector, how can such costs be considered affordable and commonplace in the public sector?

The incremental changes made earlier this year by state government will have an excellent, long-term impact for state taxpayers.

Full disclosure: The author of this post, aka moi, has a pension from his time working for St. Louis County government (2001–2007) — and, no, he was not required to contribute to it.

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About the author

David Stokes

Director of Municipal Policy

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