A reader sent me an article from the Boston Globe concerning a proposal to tweak pensions for government workers in Massachusetts. First, the article notes that taxpayers are currently on the hook for $20 billion in “unfunded costs”. That’s over $12,000 for a family of four and will grow if the pension fund does not obtain the 8 percent annual investment returns forecasted or if medical technology improves and retired workers live longer (an MBTA worker can retire at age 41 with a full pension, fire, police, and prison workers at 45, so our biotech crystal ball has to be accurate out to approximately the year 2070).

The new system preserves the ability of government workers to boost their pension by working overtime towards the end of their career: “pension benefits would be calculated based on their highest earnings over a five-year period, instead of three years.” (i.e., they’ll have to do a lot of overtime during for five years rather than three if they want their pension to be higher than their old base salary)

My personal favorite part of the proposal:

Another, known as “spiking,’’ involves employees nearing retirement who are suddenly given a new job title with a dramatic boost in salary. Under Patrick’s plan, they would have to prove that their promotions were warranted.

As there are no productivity or achievement standards for government workers, how would it ever be established that a promotion was “unwarranted”?

More: press release from the politicians (notably does not contain information on the existing underfunding and how much taxpayers will have to cough up); also check out http://www.nytimes.com/interactive/2011/01/23/magazine/rockford.html, which has portraits and audio interviews of people in Rockford, Illinois. They are trying to figure out how $10/hour ($20,000/year) private sector workers can support the $52-80,000/year public sector workers (whose total compensation is almost certainly over $100,000/year when the value of pension promises and other benefits are considered).

Reminder: this video of a firefighter talking about his lifestyle and compensation is always worth watching just before paying a tax bill.