Half-Million-Dollar Cash Payout Shows Why Public Pension Reforms Are Necessary
The former director of Saint Louis City’s firefighters’ pension system, Vicky Grass, took home a $579,210 payment this summer when she retired at the age of 63. This is in addition to the regular $4,870 pension check she will be receiving each month. While this is no doubt good news for her and her family, it’s an illustration of the sort of excess we often find in public pension systems.
Retirement packages like this are unheard of in the private sector. This is because the market usually will not allow for them. Looking at Grass’s windfall, it’s important to remember a few things:
- Grass is cashing in on a system put in place by elected officials. We may feel that Grass is personally ripping us off, but the system was set up through the political process. Grass is simply one lucky beneficiary of a system put in place years ago.
- Public pension obligations pose a serious threat to Missouri government finances. The Show-Me Institute’s study on Missouri’s pension systems shows that these systems are often seriously underfunded. Day-to-day government waste is a problem, but when you see municipal bankruptcies, like in Stockton and San Bernardino, the bloated pension systems are usually the key factor in the city’s insolvency.
- As the Show-Me Institute’s recent study on the legal options for reforming Missouri pensions shows, once the public is on the hook for retirement obligations like this, it can be very difficult to fix things. Courts often treat pension obligations as contractual obligations protected by the U.S. Constitution. As a taxpayer, this means you can be stuck paying for a sweetheart deal agreed to years before you could even vote.
In order to avoid unfair and unsustainable public compensation schemes, we must vigilantly watch over the agreements entered into by public officials. We need to insist on transparency in public affairs and demand public retirement systems that do not unfairly burden the taxpayer.