Recently, candidates for office in Iowa have been asked to promise future Iowa public employees that they will make no changes to the Iowa Public Employment Retirement System (IPERS) retirement plan. Instead, politicians need to state clearly that they make no promises to future employees about their retirement benefits. The fact that IPERS is currently underfunded by about $7 billion shows clearly that we already have over-promised benefits when compared to what we expected taxpayers and public employees to pay.
(When government has a defined benefit plan, the participants seem to think that any over-funding is their asset, but any under-funding is a liability of the taxpayers. In the past, when IPERS was over-funded, benefits were increased!)
The way to make sure that we don’t make retirement benefit promises that turn out to be more expensive than we expect to pay is to put new government employees on a defined contribution retirement plan – just like most employees in the private sector. This will cause the unfunded liability to come due over the next 50+ years, but at least it won’t get worse.