"This Is All About the Money": Pension Fund 'Crisis' a Red Herring, Union Chief Says

Posted Feb 18, 2011 11:30am EST by Aaron Task

With 45 states facing an estimated $125 billion budget shortfall in fiscal 2012, the pension plans of public sector employees are coming under intense scrutiny.

New Jersey's Chris Christie made pension reform a key plank of his 2009 campaign, and last year proposed cutting benefits for new hires and banned part-time employees from enrolling in the state's pension system.

The NJ Republican is at the vanguard of a movement among state and local officials to "take on" public employee unions. Gov. Christie's actions were controversial at the time and he's become a spokesman of sorts for the pension reform effort.

But Christie now appears tame after Wisconsin Governor Scott Walker (R) threatened to call out the National Guard if public employees strike in response to his attempts to restrict their collective bargaining rights. As with other governors, Walker is also asking public employees to contribute more to their pensions and health insurance benefits. (On Thursday, thousands of union members gathered at the capitol in Madison where Democrats effectively delayed a State Senate vote on Walker's plan by not showing up to vote.)  

Gov. Walker has excluded firefighters and policemen from his reform efforts, but other elected officials have not. In response to what it sees as a mis- and disinformation campaign, the International Association of Fire Fighters (IAFF) is "fighting back against politically motivated attacks on our members' pensions."

The union, which represents about 300,000 firefighters and paramedics nationwide, recently launched a "public education campaign" featuring a full-page ad in the USA Today last week with the tagline: "After a Career Saving Lives, Politicians Want to Take Our Life Savings."

I recently spoke with IAFF President Harold Schaitberger about the campaign. He says a "hysteria" is being created by anti-union elements and those responsible for the pension fund crisis in the first place: Wall Street and reckless politicians.

Fight Fire With Fire

"What is this all about? This is all about the money," Schaitberger says.
"What this is really about is for Wall Street to be able to get their hands on the $2.7 trillion that are in institutionally managed [pension] plans."

If public employee pensions are converted from defined benefit plans to defined contribution plans such as 401Ks, "they know it's the next cash cow for Wall Street," he says. "Individuals will be charged higher fees, they'll be churning their investments and won't really have the ability to measure performance and objectives by those who will now be allegedly helping them prepare for retirement."

Schaitberger also takes umbrage with politicians who failed to live up to their obligations and now blame the unions for pension shortfalls. "Too many states have robbed people of their retirement security, but they are blaming workers for the crime," the IAFF declares, citing N.J. as the worst offender:

Since 2001, the state of New Jersey has "never made more than 58.8% of the required annual pension contributions to the pension fund for police and fire fighters, and completely skipped making payments from 2001-03," according to the IAFF. (Editor's note: We have offered Gov. Christie an opportunity to appear and respond; the request is pending.)

Slash & Burn

Fiscally irresponsible politicians "are taking advantage of an economic crisis and using that as a tool, in a perverted way, to try to turn the clock back on what they have agreed to and what they negotiated," Schaitberger says. "We'll try to be responsible and bring forward solutions but we're not going to allow mayors and governors to slash, cut and burn the benefits and wages" of our members.

The accompanying video is culled from a wide-ranging conversation in which Schaitberger addressed several commonly held views about public employees; most notably the idea they have it easy compared to private sector counterparts.

"There is a lot of [economic] pain out there, including in our membership," he says. "A lot of firefighters have had to go home with a pink slip. This isn't some privileged sector many out there are trying to suggest."

To make his point, Schaitberger notes the average annual pension benefit for an IAFF member is less-than $40,000. "At Goldman Sachs alone, many single-year bonuses exceed the lifetime benefits an average firefighter will ever get," he says. "All of these retirements are working class, middle-class benefits that more importantly these firefighters and paramedics have earned. They put themselves in harms way...and they have given up along the way wages on the front end so that we could create sound retirements."

Some would call those who put themselves in danger in the service of others "heroes," and laud them for focusing on long-term benefits vs. short-term rewards.

On Wall Street there's another word for it: Suckers.

Aaron Task is the host of Tech Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com

665 comments

  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Anonymous 4 minutes ago Report Abuse
    This is an ad campaign to boost IAFF President Harold Schaitberger's reputation with the 300k firefighters that he represents. This is a union campaign to convince firefighters that their union bosses are giving them value for all the union dues the members pay.

    The idea that Gov. Walker and Christie and others are fighting expensive benefit packages in part of a grand Wall St conspiracy is a nice accusation, but is patently absurd. The real reasons behind the pension reform movement for public sector employees is that: 1) states are broke 2) taxpayers who don't have golden benefit packages are now funding public sector employees with silk lined plans and 3) If we don't fix our public employee cost structure, we are going to bankrupt this nation, its states and its cities.

    We are out of tax money folks. Come up with a solution. Part of it will entail pension and retirment medical reform.
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Snowdog 9 minutes ago Report Abuse
    We are not falling for the "poor union" speech from Haorld Schaiterger. We all love fire fighters, my dad was one (and an AMT) but he volunteered to help others. Government workers have been raping our country for far to long finally someone will stand up to this socialization of our country and stop it.
  • A Yahoo! User
    0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    A Yahoo! User 12 minutes ago Report Abuse
    I've worked both private sector for 35 years, chemical plant,high pay, dangerous work, laid off in '02 @ 52. Unemployed 1 year.Went to work for the State 1 year later for 1/3 the salary, with the hope of retireing with insurance. By the way, my social security benefits already earned, will be reduced by my little State pension, don't get both, even though it was earned. Now..
    State & local workers work for far less, eat a lot of beans & rice, 2 jobs( wife =3), no frills, to make ends meet. All in hope of a few good years before they die.Problem...
    Benefits awarded to congressmen, senators, governors, judges. Full benefits for 2-5 years in the system @ 4-5 times more salary annually. No talk of cuts for them. Hard to swallow for a 29 yr. civil servant whose about to lose it all. Folks never actually hear from their perspective, their sacrifices, just those in the spotlight.I've lost it all, but I don't believe in making every one go through it like me. That's not God's, or the American way. There are solutions, problem lies in the solution makers.
  • 1 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    KristinaW 13 minutes ago Report Abuse
    Of course it is about the money! There isn't any more! Unions have gotten fat off the private sector citizens for so long and they can't stand the idea that they might actually have to fund their retirement just like the rest of us! Unions were originally started to improve working conditions, but now---it's all about the money!
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    Joel, center right politi ... 23 minutes ago Report Abuse
    Of course the only thing that will be accomplished by the phony Labor Union demonstrations is a false sense of Democracy and freedom of speech and assembly. And support for the continued illusion that the Democrats care about the bottom 90%. Nudge nudge winky wink, Citizen. ;-)
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    AmericansFirst 24 minutes ago Report Abuse
    I have read posts where the retirement trust funds were laundered throught the big banks charging 15% management fees ! Is that true ?
  • 0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    AmericansFirst 26 minutes ago Report Abuse
    Over 70% of Americans will reach 65 poor and dependent on SS and Medicare or Medicaid per Congressional reports ! A personal finance textbook author put the number nearer 95%. Much of that is caused by rampant age discrimination and efforts to survive until 62 and 65 ! The destruction of jobs under the G20 agreements is the other reason ! Evil has taken over our country and Americans have been and are being deceived ! Divisiveness prevails as can be seen by the posted comments ! The US has been struck by babble ! Truth needs to prevail ! The common good needs to prevail !
  • A Yahoo! User
    0 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    A Yahoo! User 43 minutes ago Report Abuse
    16,000,000 people are on jobless benefits. If you ever talked to anyone in the Jobs and Family Benefits Service of your state, you will understand how totally unsympathetic those people really are. Sign up and make one mistake on a form, or call them on the phone to ask a question. Experience the love.
  • 2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 1 users disliked this comment
    Tom 56 minutes ago Report Abuse
    There is a solution. Louis the XVI of France and Charles I of England used it. It really works. Let's bring cheap narcotics to poor neighborhoods. Then we'll get the kids to deal the drugs. Drug addicts will become criminals. This will require us to hire more cops and detectives. Then we can build more prisons. We expand credit to increase home values. Tax the poor. Make sure the poor in cities have no schools, hospitals, or places to work. Then we'll give easier tests in the suburbs-- it worked for the Romans. When these ignoramuses complain, we'll arrest them and send them to prison. I am serious this system will work. Just ask the rich French bankers who sold Louis XVI on the idea. All we need is an endless supply of fuel equivalent to what we used in the last twenty years. This way we can all have $100K pensions and artificial waterfalls in our living rooms. Today, tomorrow and forever.
  • A Yahoo! User
    2 users liked this comment Please sign in to rate this comment up. Please sign in to rate this comment down. 0 users disliked this comment
    A Yahoo! User 1 hour ago Report Abuse
    If the students in the public schools in Wisconsin refused to attend school and shut the schools down for 2 days because they felt their rights were being trampled, would the Wisconsin Teachers, Police, Fire and State workers unions walk out in sympathy?

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