One of the ongoing challenges posed in the public policy arena is that a significant number of people stake out positions based not on a rational analysis of information but instead on emotion, prejudices, or intransigence.
An excellent example of this challenge appeared over the past couple of weeks in the Glenwood Post-Independent. In a guest op-ed column, Joshua Sharf of the Denver-based Independence Institute made cogent arguments for why recent bad investment returns mean that Colorado PERA needs to begin transitioning now to a defined contribution plan:
“A defined contribution plan, like a 401(k), puts the investment risk on the employee. A cash balance plan promises a retiree a certain cash amount upon retirement, based on salary and years of service. The taxpayers bear the preretirement investment risk. After retirement, it’s the members’ job to manage their own finances.”
(A quick aside: some people dismiss anything the Independence Institute produces because it comes from, well, the Independence Institute. Regardless of whether you agree with the free-market think-tank’s positions, they’re usually well thought out and worth considering.)
A few days later, Rifle resident and PERA member Christina Anderson fired back with a letter to the editor. Instead of refuting Sharf’s arguments, or presenting her own case for why PERA should be left alone, she offered this bizarre defense:
“Mr. Sharf asks “What if those returns fail to materialize?”
While no investment is immune to market fluctuations, PERA is constantly, I would say daily, striving to minimize any possible downturn in investment and benefits. Every year PERA reports on the overall health and benefit liabilities of the plan to the Colorado General Assembly. PERA administrators, employers and members understand we are in this for the long haul, toward a solid retirement benefit, for both current and future retirees.
For my money, I trusted PERA 20 years ago and I still trust PERA today. No qualms about it.”
No one doubts that PERA’s board and leadership has the best interests of its members at heart. This doesn’t mean, however, that we should all just leave them alone and let them do their jobs without questioning the underlying assumptions that could well be putting the retirement income of tens of thousands of state employees at risk.
As long as some PERA members insist on plugging their ears and humming to block out the conversation, meaningful progress will be difficult. Younger PERA members in particular need take an active role in advocating for a more sustainable, rational method of investing for retirement.