Rahm Emanuel Illustrates Why Public Pension Funds Ought To Be Eliminated
America has a pension crisis. Pension funds for teachers and public workers around the nation are in trouble, falling well short of funding levels needed to pay out benefits into the future. Nationally pensions are facing an estimated $4.6 trillion in shortfalls, with the average pension fund only 41% funded, according to State Budget Solutions.
Folks on the right argue that this is a systemic problem, that defined-benefit pension plans (which guarantee a certain level of benefits to people meeting a specific qualifying formula) are fundamentally flawed. Folks on the left argue that the pensions are fine, and that they only need tweaks to their investment and benefits models to survive.
But in Chicago, Mayor Rahm Emanuel shows us exactly why huge pension funds being entrusted to politicians is a bad, bad idea. (We ought to have learned our lesson in this regard from Social Security, which saw its trust fund raided by politicians long ago, but I digress.)
Mayor Emanuel, as part of his anti-gun agenda, is pushing to divest his city’s pension funds of any investments in gun-related companies. “The move could deal a hefty blow to the city’s six pension funds, which are only 50 percent funded with combined debt of $26.8 billion,” reports the Washington Examiner. “Gun sales have skyrocketed in response to calls for stricter gun control, boosting the companies Chicago is so eager to dissociate with.”
So to score points for his political agenda, Mayor Emanuel is divesting of already teetering public pension funds investments into profitable and valuable companies. Mayor Emanuel is putting politics above the well-being of his city’s workers.
Why would we expect anything else from a politician?
These pension funds are better off being controlled by the workers themselves, put into 401k or IRA plans where politicians like Emanuel can’t raid them.