Connect with Isthmus on Twitter · Facebook · Flickr · Newsletters · Instagram 

Thursday, August 21, 2014 |  Madison, WI: 67.0° F  Fog/Mist
The Daily
Share on Google+
Pensions probably save the state of Wisconsin money
on (3) Comments

Throughout the debate over public worker benefits, Walker has consistently portrayed state workers as over-compensated because of the generous fringe benefits they enjoy, including health care and pensions that are almost entirely paid for by the state.

Others have countered that public workers, who are on average more educated than workers in the private sector, receive those benefits in exchange for lower wages than their private sector counterparts (who knows how they determine who these "counterparts" are).

All I will say is that the conclusion is probably mixed. I'm sure there are some engineering majors working in state government who could be making a lot more in the private sector, but there are also plenty of uneducated workers who would have a damn hard time finding a job that provides a living wage and benefits in the market.

But there is one thing that hasn't been discussed: Our pension system saves the state big money.

First off, Wisconsin has been widely credited as having a model pension system. It is consistently funded and furthermore, it is one of the few systems in which employees share the risk associated with the plan's investments. That means that, although the state retirement system pays out dividends to retirees during years when its investments yield returns, it also reduces benefits to its members in years when the return on investment drops.

Perhaps most importantly, paying workers through pensions saves the state money because the benefits guaranteed to a worker stop after that worker dies. Unlike a 401(k) plan, any money accrued in a pension account goes back to the state, unless the worker elects to receive a death benefit, in which case he receives less in normal pension payments.

The issue of health care for state workers is also much more complex than Walker portrays it. While he reasons that the state plan must be too generous if employees don't contribute as much as they do in the private sector, he neglects to mention the incredible bargaining power the state has to negotiate a cheap deal with insurance companies.

I hope to more fully investigate the specifics of the cost of fringe benefits in the future.

Follow The Sconz on Twitter or Facebook to get regular updates on city and state politics. Please send anonymous tips, interview requests or any other comments to

Share on Google+
Show 3 Comments

Log in or register to comment

Select a Movie
Select a Theater

Promotions Contact us Privacy Policy Jobs Newsletters RSS
Collapse Photo Bar