An End to the Era of Defined Benefits
Today’s announced agreement between United Auto Workers and General Motors to resolve the ongoing dispute about retirement health benefits represents the monumental shift in defined retirement benefits. The $55 million unfunded health insurance liability symbolizes the problems associated with defined benefit retirement systems. Exponential growth in health care and retirement costs are unsustainable for even the largest companies.
The same is true for governments. Defined benefit systems are gobbling up state budgets and producing unfunded liabilities that will fall on the backs of future generations.
Consider the State of Maine. Currently, Maine has an unfunded liability for health insurance retired government workers of $4.8 billion. That figure is equal to 60 percent of the biennium General Fund Budget.
The State of Maine needs to do as General Motors did and shift away from a defined benefit system for their retirees and move to a system that provides a defined contribution. Defined contribution systems allow workers to better plan for future retirement needs while also protecting future generations from huge unfunded liabilities.
Al Fitzmorris
Posted on Nov 01, 2007
After watching the CEO of The Maine Heritage Policy Center this morning on Fox, I felt that I had to comment on what a great job that the CEO did at defining the whole problem concerning these repetitive bond issues. What happened to the money that was allocated to previous bonds of similarity that the voters have passed? what have been tangible results of those bonds at work? Every time that the state gets the money from these bonds, we never know what effect they really have, if any. As long as we keep sending these people to Augusta, we will continue to be bombarded with these reasons for needing more money for all of these frivilous projects. WE CAN NO LONGER AFFORD THESE PEOPLE. LET'S LIVE WITHIN OUR MEANS. ISN'T THAT A NOVEL IDEA.