The pension sharks are back, and once again – if you are an educator or public employee – they are circling your retirement income, drawn to your nest egg like four-legged predators are to blood. They love the smell of your money, they want some of it and the coronavirus pandemic has stirred them up.
Replacing the defined benefit pensions enjoyed by teachers and other public workers with much-riskier defined contribution plans, such as 401(k)s, has long been a goal of the Texas Public Policy Foundation and other groups and individuals who believe the primary purpose of government is not public service, but profit for themselves and their privatization allies.
The teacher retirement pension fund alone is just too huge a prize to ignore, and the sharks already were zeroing in on the Teacher Retirement System, which administers the fund, before the pandemic struck. TRS will be up for the Legislature’s sunset review next year, making the future of the pension fund a handy target. Add to that the huge public relations fiasco that TRS recently created with the expensive and not-entirely-transparent lease of office space in an upscale Austin tower, and blood started flowing.
TRS is trying to abort the tower lease, but just as publicity was beginning to wane came the arrival of the coronavirus emergency, followed by a plummeting economy and a reeling stock market, which has whacked several billion dollars off the TRS pension fund’s value. The fund still had a value of about $150 billion last Friday (April 17). So, it is not likely to dry up anytime soon.
But one of the guys at the Texas Public Policy Foundation tweeted the same day that TRS was “likely in the ditch” – not true, but a signal that the people who want to take away your defined benefit pensions will use the volatile stock market as an opportunity. Do you want to trade your defined share of a $150 billion pension fund with a long performance history for a 401(k) with no guarantee of any kind of return? The only guarantee a 401(k) offers is how much money you put in it, not how much, if any, you take out of it.
A recession is a particularly awful time to be talking about 401(k)s. Do you have one? Have you checked your balance lately? Yeah, it may be, as the guy said, “in the ditch.” How many school teachers, bus drivers or cafeteria workers want a 401(k) as their sole source of retirement income?
But the pension sharks have a different interest in 401(k)s. They consider the potential management fees they and their allies, instead of TRS, could be raking in from billions of dollars’ worth of 401(k)s. So they will continue to circle.