[quote=CA renter] Again, “taxpayers” (and every public employee is a taxpayer who is paying at least as much as everyone else, especially since they are W-2), DO NOT pay the pension benefits to these retirees. The benefits are paid entirely from the retirement funds, and those funds are funded primarily by investment returns, employee contributions, and employer contributions. The “taxpayer” costs come from the employer contribution side for current employees[/quote]
This statement is misleading. Money is fungible. The monies that are paid into public pension plans by both employees and employers (re: taxpayers) go to fund the entire kit and kaboodle – that is, retirement for both retired and current employees. The pension fund is one big pile of money that needs to fund the retirements of everyone in the plan – both retired and current employees – while taking into consideration, of course, future contributions by both groups. When the local municipality cuts the checks to the pension fund each year (from taxpayer proceeds), the pension fund doesn’t segregate these funds into groups like “this part is for current employees and that part is for retirees.” There’s an actuarial calculation of funding status that’s based on a large number of assumptions, including life expectancy, pay raises, etc. But that check that’s written from the municipality to the pension fund is based on TOTAL funding needs, which INCLUDES the funding necessary for retirees. Again, money is fungible.
