- Police Beat
- The Forecaster
Regarding Edgar Allen Beem’s column “Maine’s Phony Pension Crisis,” the Pension Protection Act of 2006 for defined benefit plans changed funding requirements to 15 years from the previous 30-year standard. “Red zone” plans were mandated to terminate certain benefits, like lump sum buyouts, to improve plans into the green zone within 10 years. PPA2006 was passed at the height of the recent bubble, to fully vest employees’ pension benefit so they could hop to new jobs with their pensions. PPA2006 needs to be adjusted to post-bubble reality.
Twentieth century pension systems were based on military pensions – vested in 10 years (buyout), retirement with full benefits after 20 years of service. Social Security insurance was designed to provide a minimum base to be combined with other plans. From what I understand, Mr. Wakelin’s statement that Republican (Gov. McKernan) “responsibly addressed pensions” is not correct, since he approved benefits, but refused to fund them. The PPA2006 and the “pension crisis” could be a money grab to force working people to pay for past and current deficit spending, which primarily benefited the wealthiest 1 percent.
Using facts taken out of context to squeeze dedicated career employees is wrong. Such discourages qualified competent people from applying for jobs that need dedicated employees. If the system is now 70 percent funded compared to 26 percent in 1987, then the funding issue is headed in the right direction. Actuaries should use PPA2006 and pre-PPA2006 standards to show the true status of the pension funds prior to making any changes.