Barro: Scituate shows why RI should end local pension plansFebruary 13th, 2013 at 10:42 am by Ted Nesi under Nesi's Notes, On the Main Site
Last week’s Target 12 investigation of Scituate’s absentee pension board has sparked a renewed conversation about how the state should handle its troubled locally run pension plans. “There is a concerning set of facts that you’re hearing about in Scituate,” Treasurer Gina Raimondo said on Newsmakers Friday. But, she continued, local officials need to negotiate with organized labor if they want to go into the state-run system (MERS).
Josh Barro, a columnist for Bloomberg View and longtime friend-of-Nesi’s-Notes, also sees a lesson in the Scituate investigation – most municipalities are just not equipped to handle the complicated task of managing a pension fund:
In most states, public employee pension systems are run either by the state government alone or by the state and a handful of the largest cities. For example, New York City is the only municipality in New York state with its own plans; all other cities and counties participate in two large statewide funds.
Pension systems are complicated, and overseeing them properly takes time and expertise. This is a heavy lift for municipalities overseeing small pension plans. …
Of the 110 statewide pension systems covered by the Public Funds Survey, the worst-funded is the Illinois State Employees’ Retirement System, with a funding ratio of 35.5 percent. Sixteen of Rhode Island’s 36 local plans are worse funded than Illinois SERS. …
The more promising long-term fix, floated by some Rhode Island lawmakers including State Treasurer Gina Raimondo, is to close municipal pension plans and have one pension system for municipal workers overseen by the state government.
• Related: Raimondo: Move 36 local pension plans into state-run system (Jan. 30, 2012)