This piece of common sense is so obvious that I’m pretty sure most people assume it is already the law. It isn’t: every government and corporation should be required to set aside in an independently managed fund all of the monies required to fully vest the pension commitments of the organization. There. Simple. Under no circumstances should the government or a corporation be allowed to ever, ever touch that money.
I am aware of the fact that at the beginning of Social Security, the government actually had to pay out to people who had never contributed money it had never collected for the program.
Your are astonished? You mean they don’t have to? You mean the government can simply collect the money required for these pensions and then spend as much of it as it wants on other things– like bizarre failed weapons systems or wars– while promising that future governments will make up the difference?
And thus we have Illinois. And Republicans claiming– it’s an outright lie– that Social Security is unsustainable. In fact, there is nothing more sustainable than Social Security, if the government would simply pay it back for all the money it stole out of the system so that Mitch McConnell could use it so he could claim to not raise taxes and still– miraculously– spend more money on Homeland Security and the military.
The Republicans act as if Social Security is funded by general revenue, so you are not really entitled to it. But Social Security was not instituted to fund general government programs. It was instituted specifically to collect your contribution to your future retirement needs. The U.S. government has been borrowing this money for years to fund other government expenditures– like the stealth bomber or the Mitch McConnell Freeway.
I suspect that a Republican government will try to find some way to keep the revenue stream without keeping the benefit. That is what they do. A tax on the working class with an upper ceiling is a Republican’s wet dream.
By the way, I’m not averse to the idea that the independence of pension funds should go two ways. The rate at which employers and employees contribute to the fund should be wisely and carefully crafted, and the benefits received should also be wisely and carefully crafted and the brains should carefully establish the correct rates and then it should all be locked in.
That means that if inflation eats away at the value of those pensions, the price of security is that they will not be adjusted beyond the rate fixed in the original agreement. That means it could be adjusted, but only if the possibility of it was factored into the original terms of the plan, including the potential costs.
That means, yes, some pensioners might be disadvantaged by high inflation at some point– but I don’t think that’s an unreasonable price to pay for real security. (I’m not going to go into it here, but people then also should be aware of the government using inflation as a tool to reduce the real cost of their obligations.)
Yeah, it’s complicated.