Imagine that you invest decades in public service working a state job and serving your community. You earned a fair, not exorbitant, salary. You chose public service, in part, to secure a decent retirement for your family and trusted that promises made will be kept. That monthly pension check is the cornerstone of your retirement plan. But then imagine a day when those pension checks just stop. You are left high and dry.
Sound impossible? That’s exactly what happened to hundreds of retirees in Prichard, Ala., in 2009.
How did such an outrage occur?
The answer is simple yet sad. Public officials in Prichard betrayed retirees. They broke promises and faith with public servants, refusing to maintain the pension fund at a level sufficient to actually pay the promised pensions to retirees.
Although state pensions in Oklahoma are not yet endangered, Prichard is a warning to employees, retirees and taxpayers. What happened to retirees in Alabama must never be allowed in this state.
According to official reports, Oklahoma’s seven defined benefit pension plans have a combined $11.4 billion unfunded liability. But Oklahoma’s unfunded liability may actually be $42.7 billion, the number reached when calculating the liability using risk-free rates to provide more certainty that benefit promises can be kept.
Massive unfunded liabilities threaten promises made to public employees and basic services for all citizens. Paying down pension liabilities means less money for essential services such as education, health care and police.
These pension troubles are not unique to Oklahoma. They exist across the country. Too often, leaders bury their heads in the sand.
Oklahoma can be different. We can show what real reform looks like by closing defined benefit plans to new members and instead offering a defined contribution alternative.