Gov. Walker, “It ain’t broken, don’t fix it!”
Gov. Walker has launched a full-scale war on the Wisconsin Retirement System (WRS). His overall goal is to drive the current system, which is one of the best in the nation, into bankruptcy.
Before getting into the specifics of his plan, it is important to understand a couple of things about the Wisconsin Retirement System model. Wisconsin has what is called a “defined benefits” model.
Our retirement system is really an annuity that guarantees a specific monthly payout (benefit), based on salary, funds paid into the WRS and years of service. In order for this model to work, current employees must pay into the system so the fund can pay them a defined benefit when they retire. This model will not work if current employees cease contributing.
The second model is called a “defined contribution” program.
It allows employees to make tax-free contributions into an IRA-like retirement fund, perhaps with an employer match. But it does nothing to provide a defined amount of money the employee will have upon retirement. And, of course, the public employer has no responsibility to require that employee contributions be managed prudently. It will be an “employee beware,” system that is privatized and voluntary. (Read that as easy to defer making contributions in order to have more to spend today.)
Gov. Walker and his supporters in the legislature are using (at least) the following five strategies:
1. Drastically increase the number of employees who take early retirement and start taking funds out of the WRS;
2. Reduce salaries of teachers and hiring lower paid entry-level employees to reduce the amount of money going into WRS;
3. Create a new retirement option for new employees that will allow them to “invest” a portion of their wages directly into an IRA-like retirement fund. This option will be called the Portable Retirement Option (PRO). This “defined contribution plan” will be marketed as way for employees to invest directly in mutual funds that they can keep forever, regardless of where they work. The net effect of PRO will be to siphon off dollars from the current retirement system.
4. By decreasing funds going into the WRS and increasing dollars going out of WRS, in a few years the fund will be heading towards bankruptcy. At that time the legislature and governor will be asked to pass emergency measures that drastically reduce payments to past, current and future retirees. (Of course, his spokespeople will paint this picture to new employees to encourage them to choose the PRO (the defined contribution plan), which will hasten the process of bankrupting the current system.
5. And if they privatize the whole WRS and send it off to Wall Street the bankers there will make a fortune as they lose the workers’ money gambling on the market. But campaign donations will still flow into candidates’ accounts.
The saying, “If it ain’t broken, don’t fix it!” is so true. Citizens would be well served by telling Gov. Walker to keep his hands off the WI Retirement System. Citizens can join nearly 37,000 citizens who have already said just that in this petition: http://signon.org/sign/save-the-wisconsin-retiremen?source=s.em.cr&r_by=193567.&mailing_id=3593buzz
Ron Biendseil, retired Dane County employee
Buzz Davis, retired Wisconsin State employee