Screw you, old person!

Judges in Colorado and Minnesota have dismissed court challenges by retired public workers whose pensions had been cut — developments that may embolden other states and cities to use pension reductions as a tool to help balance their budgets. The two lawsuits sought to reverse reductions in the cost-of-living adjustments that Colorado and Minnesota had previously promised to retired public workers. Generally speaking, once lawmakers have agreed to provide certain pension benefits to public workers, it is difficult, if not impossible, to roll them back because of protective language in state laws and constitutions and years of court interpretations.

Here's astory that should terrify retired and soon-to-retire public workers everywhere:

Public pensions have lately been treated as an impending crisis, an emergency that must be dealt with immediately and must be taken out of the hides of workers. But Monique Morrissey of EPI explains that it's less of an emergency than it's been portrayed:

Public pensions now have an estimated $700 billion in unfunded liabilities. According to the Center for Retirement Research, public pensions last year had around 78% of what they needed set aside to pay for pension benefits. To make up the difference, state and local governments would have to devote about 5% of their budgets to pension contributions over the next 30 years, up from under 4% today, assuming an average 8% return on fund assets. This is a significant bump, but hardly untenable, especially for the majority of state and local governments that have kept up with their pension fund contributions. (The average funding ratio and required contribution cited above includes a few states like California, Illinois, and New Jersey that short-changed some or all of their pension funds over many years.) Nor is such an increase unprecedented: State pension contributions were around 6% before the long bull market that began in the mid-1980s.

That's the state budgeting angle. There's also an obvious human angle. Public workers are undercompensated relative to private sector workers with equivalent qualifications. The wage gap is greater than the total compensation gap: public workers earn $6,061 less per year in wages than equivalent private sector workers, but when benefits, including retirement benefits, are factored in the gap narrows (but does not close) to $2,001.

That means that the $4,000 difference between the wage gap and the compensation gap is a direct trade-off that public workers have taken: lower wages than they could otherwise have earned in exchange for better benefits (though still not enough better to equal what their private sector counterparts get). Now, governments are effectively saying, "Psych! That trade-off you made? After spending your career earning less than you could have, you no longer get the pension that was supposed to provide the upside to the trade."

John Cole nails it:

What are these retirees, who made financial decisions their entire lives, supposed to do? If you thought for 40 years as you worked that you had X amount of money coming in retirement, it would substantially change your investment strategy and portfolio. You can’t recover when the government just yanks it all away. You don’t get a do-over to go back and invest more.

In these days of class warfare from above, though, state governments that shortchanged their pension funds do get a do-over, as long as it involves screwing workers.