IT'S OK, WE'LL STILL HAVE SOCIAL SECURITY

Posted in Rants on September 20th, 2010 by Ed

At the risk of repeating everything I've already said about the Baby Boomers – the greatest, most amazing, and specialest generation ever to grace the planet – they still manage to shock me on a regular basis with their brazen selfishness.

The pension system for the University of California system was running a surplus by the end of the 1980s. So in 1990 they did what any reasonable Boomer-led institution would do: they stopped contributing to their own retirement benefits. The state happily did the same (the system was funded by employee payroll deductions and matching contributions from the state). This is classic Boomer logic. If your pension fund / Federal budget runs a surplus, stop paying into it immediately and spend the "savings" on yourselves.

Of course it wouldn't be a Boomer-run operation if the pension fund made wise, safe investments. When the real estate market collapsed the fund lost almost 25% of its value. Shockingly, the decline in value combined with 20 years of not paying into the system left it billions of dollars under water and unable to meet its obligations. So employees had to start contributing again, albeit a mere 2% of gross pay. But the Regents have just increased the contribution requirement to 5% in what is now essentially a pay-as-you-go system. Professors (or Regents, or custodians, or any other employee) who started working in the 70s or 80s did not contribute a cent to their own retirement for two decades and now they've decided that the current young generation of workers will bankroll their retirements.

It would be one thing if younger workers were being asked to increase their contributions in order to make the system solvent again. But the pension fund is nearly insolvent and today's new employees are paying just to keep benefits flowing to current and near-future retirees. I need to find one of those "Keep Working – Millions on Welfare Depend on You" bumper stickers and carefully replace the misguided "welfare" bashing with "Millions of Boomers."

This is only going to get more common in the next few years. Illinois, the only state that might be in worse financial shape than California, recently reformed its Judges' and Legislators' pension plans with the typical Boomer-friendly provisos – current employees near retirement are grandfathered in at 85% of their final salary with a 3% yearly increase versus 60% and no increase for everyone who follows. And it's virtually certain that Social Security "reform" will take the general approach. Keeping in mind how few of us in the younger generations have decent jobs with decent salaries, it's a miracle that they can massage the math enough to make these schemes viable in the short term – to say nothing of their almost certain insolvency over the long run.

Thanks, folks. We'll pay more into your retirement system than you did, secure in the knowledge that it won't even exist anymore by the time we need it.