Sunday, December 11, 2016

SEBAC explained by a private sector worker

I think many things in the public sector can be confusing to those who work in the private sector.
SEBAC, which was in the news again this week, is one of those.

SEBAC is a coalition of Connecticut state workers who bargain as a group for healthcare and retirement benefits.
It makes a lot of sense, otherwise, the state could potentially have different healthcare and retirement plans for each agency, which would not only be a nightmare to administer, but would be much more costly, since there are savings in plans with more members.

Unfortunately, the state has underfunded the retirement plan since the 1930s.
You don't have to be an accountant to understand where this would lead.
Once baby boomer state workers started coming of retirement age, we were in trouble.
Kind of like falling behind on your home improvement loan and then one day,
it's due!
It's not the state workers fault.
Frankly, it's the residents of Connecticut fault, for allowing our elected leaders to do this.

Of course, the state workers are an easy scapegoat.
It's easier than admitting we are all part of the problem.
And of course, the state workers have a real interest in fixing the problem.

So twice, in 2009 and 2011, the workers gave concessions to fix a problem they did not make.
But the problem remains because of chronic under-funding and more recent market performance.

So this week, once again, the state employees agreed to changes in the plan.
The new agreement is a long-term plan to properly fund the system and to use a more conservative assumption on the expected return on investments, while at the same time, protecting the hard earned retirement of our public service workers.  Instead of trying to "pay the bill" all at once, it stretches it over several years.

To me, this seems like a win-win.
The residents of the state of Connecticut get out of a retirement problem that we, and those who came before us, caused, and the state workers have their retirement protected.

I have already seen some say that the retirement benefits of state workers are too rich.
I disagree.
The concessions of 2009 and 2011 provided for multiple tiers, based on when a person started working for the state.  New employees retirement is not as it once was. New employee retirement is in line with the private sector.
The only people getting great retirements in this day and age are the millionaires, some of whom love to drive a wedge between private and public sector workers, so we are distracted from their imminence wealth and refusal to pay their fair share of taxes, while they laugh all the way to the bank. (which is probably in the Cayman Islands)

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