Campaign Questions: Should the comptroller have a role in making sure Texas’ public pension plans are solvent? If so, how should this be done?
Details on state and local pension plans in Texas as reported to the Pension Review Board and submitted by each plan in response to a public information request from the Comptroller’s office. The Texas Comptroller should have no role in the Texas’ public pension plans other than reporting their fiscal information in an effort to be transparent.
Currently the Local and State pensions have an unfunded liability of $53,849,110,848 that's more than the entire Texas Appropriations ($52,330,160,968) for 2014 & 2015 once you remove Education and Health and Human Services. Which means currently the pensions don't have the money to pay what is due all the pension holders. To understand how we got to this point we first must understand history and take quick trip back for those who may not be familiar or don't remember. In our not so distance past teachers, police, firefighters and other civil servants were used as political pawns by nefarious politicians. These unscrupulous politicians would upon election terminate employment of those teachers, police, and firefighters who did not vote for them or dared to speak out in opposition and replace them with those more loyal. This was common place enough that the formation of teacher, police, and firefighter unions were established in a measure to protect these civil servants from this admonish behavior. Today the circumstances that once gave rise and need for these organizations are protected with State and Federal labor departments, in addition to agency Human Resources.
As Texas Comptroller I would strongly advocate that all government employees be given the same right to influence their future and retirement as any other citizen through the implementation of 401k or IRA systems. Over the long haul, 401k's produce more money at retirement than traditional private-sector pension plans, new research suggests, though the risks are obviously higher. With 401k's and IRAs people to end up with more money at retirement than they would with a traditional private-sector pension plan, according to a study by the Employee Benefit Research Institute, a nonpartisan think tank in Washington. In addition to great return on investment the fund of a 401k or IRA are available to the employee for life events such as buying a home, children's tuition, financial
emergency, and can follow someone from job to job without being having to be fully vested or pay annual dues.
Detroit's Bankruptcy Should Be A Warning To Every Worker Expecting A Pension, Or Social Security. Remember the Texas Local and State pensions have an unfunded liability of almost $54 billion. Detroit owed somewhere in the neighborhood of $20 billion to over 100,000 creditors. One group of creditors particularly wary of a municipal bankruptcy is Detroit’s public sector labor unions. They fear a bankruptcy judge might allow the city to cancel or reduce their pension or retiree health benefits. The unions have a lot of law on their side, but they are still right to be worried. More importantly, this situation should serve as a warning to every person expecting to retire one day and collect a pension or other retirement benefits: do not trust other people with your future.
By affording the civil servants the same 401k and IRA that is available to everyone else, and outsourcing the administration and management of these funds to companies like USAA, Vanguard, Fidelity, and others, it will create an annual budget reduction of $1,755,014,356 by eliminating the pension administrative overhead, while maintaining retiree insurance benefits. This $1.7billion cost reduction is the same amount we spend annually on the school lunch program, and we've eliminated the liability of the state and empowered people to have control over their own lives. Not to mention if local municipalities follow suite the cost reduction and lessened tax burden we will all feel.
As Texas Comptroller I will work to give you the right to retire on your terms and control your own future.