New Poll Reveals Strong Majority of Americans Support Pension Reform
State pension plans across the country continue to face significant fiscal challenges. In fact, nonpartisan fiscal watchdog State Budget Solutions estimates that state pension unfunded liabilities now total $4.7 trillion. The latest Reason-Rupe national telephone poll of more than 1,000 adults reveals that state pension unfunded liabilities have captured public attention. Americans strongly support pension reform in order to help governments keep their pension promises to retirees and current employees, while protecting taxpayers.
Americans are rightly concerned about unfunded liabilities in state pension systems. According to the Reason-Rupe poll, absent pension reforms, 72 percent of Americans believe that their state and local government will not be able to keep their pension promises to government workers. As Utah Sen. Dan Liljenquist discussed in Keeping the Promise: State Solutions for Government Pension Reform, the outdated defined-benefit pension model used by state governments is not fiscally sustainable. With a defined-benefit plan, the government promises to pay retired employees set payments per year, throughout their lifetime, regardless of actual market returns. When governments are unable to keep the promise, due to poor market returns, or other factors, retirees, employees, and families are put at risk. Nearly three quarters of Americans surveyed are concerned that their state government would have to raise taxes to fulfill their pension promises to government workers, and 77 percent oppose reducing services in order to pay public pension debt.
The Reason-Rupe poll demonstrates strong public support for pension reform. While the government continues to offer outdated defined-benefit plans, an overwhelming majority of private sector employers offer modern, defined-contribution, 401(k) style plans. With a defined-contribution plan, employers and employees each contribute towards the employee’s retirement throughout the employee’s tenure on the job. According to the Reason-Rupe poll, 67 percent favor defined contribution plans for new public employees. Furthermore, 66 percent support transitioning existing public employees to a defined-contribution plan. Not only do defined-contribution plan offer more mobility, but employees can sue their employer (the government) if their employer is not properly funding their retirement account. Defined-contribution plans promote stability, security, and choice for employees.
The Reason-Rupe poll shows that public pension reform is an important issue for communities. As lawmakers meet to discuss solutions, they should remember that Americans want their government to keep their pension promises to workers, while protecting taxpayers. Defined-contribution plans promote stability and security for employees, retirees and families. As Senator Dan Liljenquist says in Keeping the Promise, pension reform is not partisan issue, but a math issue.