1/11/2011 12:12:33 PM

Union Chief Defends Pensions, Decries 'Political Rhetoric'

While Florida lawmakers are resolute on revamping the state and municipal pension system, union members from the AFL-CIO labeled allegations that Florida's public employee retirement plans are underfunded and provide lavish benefits as "myths."

(January 11, 2011) -- Union members from the AFL-CIO, which represents 600 local unions and 500,000 workers, have disputed "myths" about Florida's pensions funds, questioning whether the system is in need of an overhaul.

The group countered claims that Florida's public employee retirement plans are underfunded and provide generous benefits. Furthermore, they disputed assertions that public pension costs are too high and detrimental to local economies. "We can't find any verifiable information to indicate that those claims are true, that those claims are anything other than political rhetoric and ideological posturing," Florida AFL-CIO legislative and political director Rich Templin said, as reported by Bloomberg.

Governments around the nation are undoubtedly buried in pension liabilities largely as a result of administrations pushing the pension problem to the next generation -- political attempts to divert blame and responsibility, industry experts note. Yet, pension benefits averaging $16,000 to $23,000 a year cannot be considered extravagant, Templin asserted. "This is not lavish and does not represent any type of sweetheart deal," he said, "especially considering that most public-sector workers earn less on average than their counterparts in the private sector."

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Meanwhile, Gov. Rick Scott has called the $122 billion Florida Retirement System "a ticking fiscal time bomb," unable to sustain its current high rate of return on investment. In contrast to the AFL-CIO's position, the James Madison Institute separately issued a report led by Florida State University economics professor Randall Holcombe citing a "tsunami" of city pension liabilities around the country. The Tallahassee think tank acknowledged that underfunded public pension liabilities are placing significant burdens on government budgets, curtailing their ability to provide services. It is "now is the time to address the potential problems before they get out of hand," the report said.

To contact the aiCIO editor of this story: Paula Vasan at pvasan@assetinternational.com; 646-308-2742