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Some Bad Pension Things You Cannot Ignore

February 12th, 2013 · 3 Comments

We’ve been pointing out the negatives of this for, what, a year?

In Frankfort, Kentucky, the state legislature is currently debating the retirement future of its public workers. The six plans that make up the Kentucky Retirement Systems have $33 billion in underfunded liabilities, a situation that is putting a strain on state and municipal finances at a time when the state can least afford it. In early January the mayors of Kentucky’s two largest cities, Louisville and Lexington, publicly called on the governor to support pension reform, arguing that the pension costs on their cities were “spiraling out of control.” Among those advising Kentucky lawmakers is the Laura and John Arnold Foundation — the private foundation of former Enron trader turned hedge fund manager John Arnold and his wife. Kentucky is just one of many states where Arnold is seeking to play a role influencing the highly contentious pension debate, and not everyone is happy to see him.

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The Arnold Foundation advocates a move away from traditional defined benefit models toward pension plans that, it argues, are more sustainable — either some kind of defined contribution plan or a so-called cash balance plan, which represents each individual’s savings in the fund as a cash balance available upon retirement. Last year the Arnold Foundation began a partnership with the Pew Charitable Trust, a Washington, D.C.–based not-for-profit, to further its reach. To date the two groups have given advice and assistance in 24 jurisdictions, and the Arnold Foundation has spent around $7 million on pension reform efforts in states such as Arizona, Colorado, Illinois, Montana, Nevada and Rhode Island.

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“The unholy alliance between Pew Center on the States and the Laura and John Arnold Foundation showcases how an ideologue like John Arnold can partner with a seemingly nonpartisan organization to push a sloppy policy proposal,” says Steve Barger, coordinator for the Kentucky Public Pension Coalition and managing member of Steve Barger Consulting. “The Arnold Foundation has made no effort to hide their disdain for public employees — and that conviction is now coming out in the form of recommendations to eliminate the traditional defined benefit pension plans in Kentucky and other states.”

Meanwhile, the rest of the media sits on its hands.

Tags: Corruption · Wasted Money

3 responses so far ↓

  • 1 Chris Tobe // Feb 12, 2013 at 2:07 pm

    The unholy alliance mentioned between Pew Center on the States and Arnold, has been merged with a bipartisan unholy legislative and executive alliance. All of these parties agree that they must put up these meaningless pension bills like SB2 to give the appearance of doing something to avoid the blame for raiding the pension of over $10 billion for the past 10 years. All SB2 does is try to shift the blame on to employees and off the legislature and governor.

  • 2 James R. // Feb 12, 2013 at 2:35 pm

    We could stop legislators from DOUBLE DIPPING, like many do. The state cannot afford to pay avergae workers, but can pay amzing outlayes to legislators… Just saying.

  • 3 Terri Lane // Feb 13, 2013 at 8:24 am

    Its all smoke and mirrors. The Arnolds have an agenda beyond just gutting our pensions. If all of these states were to discontinue their pension programs and switch to 401k’s, the Arnold’s friends on Wall Street would have a giant windfall of new clientele and lots of new money to spend shamelessly. Its legalized gambling on a very grand scale. The problem is we do not get to spin the handle ourselves but we get to pay for their losses. It’s easy to play very risky when it’s someone else’s money.