get it home page promo

Quick action needed on pensions

An IR view
2011-10-05T00:00:00Z Quick action needed on pensions Helena Independent Record
October 05, 2011 12:00 am

There’s no easy fix for the shortfall facing the teachers’ pension system, but acting fast will make the solution less painful than delaying action for political expediency.

The outlook is far from bright for the Montana teachers’ pension system, which will run out of cash in a little over a half-century if the imbalance between contributions and benefit payouts isn’t corrected.

Public employee pensions are becoming, if they aren’t already, anchors around the necks of various municipalities and other government agencies from coast to coast, and in some sense Montana is lucky that the situation here isn’t worse. As it is, actuaries last week said the Montana Teachers Retirement System needs an immediate infusion of some $633 million, lest it run out of money around 2055.

There’s no easy answer. Either benefits to retired teachers will have to be cut, which has happened in other places but which strikes us as unfair to teachers who were hired on contracts that specified particular contribution and benefit levels; contributions will have to be increased, which may be what’s on the horizon for newly hired teachers at the very least if it’s not the case for teachers already in the system; or the Legislature will need to earmark a lump sum of cash to extend the future of the system.

The sunny (or at least not completely cloudy) side of the picture is that there’s time to fix the system — but the sooner something is done, the less it will cost. In that view, the pension fix will be a good test for everyone involved, from taxpayers to teachers unions to lawmakers: Who’s willing to endure some pain now rather than kicking the can down the road, when the fix will hurt even more?

The pension problem should also be a lesson in revenue estimating (sound familiar?), as high expectations for what the pension investments would earn before they were paid out proved to be too optimistic. The long-term deficit for the fund, or its “unfunded liability,” now sits at $1.8 billion, up some $200 million in just 12 months as investment returns have suffered. It’s dangerous to count on the stock market for consistent returns, and fixed income investments like government bonds have historically feeble interest rates today. Best to be conservative when guessing how fast an investment portfolio will grow.

The next governor and Legislature must find the solutions and we look forward to hearing their recommendations, because the sooner action is taken, the easier it will be to put the teachers’ retirement fund back on stable ground for much more than the next generation of teachers.

Copyright 2015 Helena Independent Record. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(1) Comments

  1. caribouboy
    Report Abuse
    caribouboy - October 05, 2011 5:01 am
    Move 'em to a 401K. Quickly!

Civil Dialogue

We provide this community forum for readers to exchange ideas and opinions on the news of the day. Passionate views, pointed criticism and critical thinking are welcome. Name-calling, crude language and personal abuse are not welcome. Moderators will monitor comments with an eye toward maintaining a high level of civility in this forum. Our comment policy explains the rules of the road for registered commenters. If you receive an error after submitting a comment, please contact us.

If your comment was not approved, perhaps:

    1. You called someone an idiot, a racist, a dope, a moron, etc. Please, no name-calling or profanity (or veiled profanity -- #$%^&*).

    2. You rambled, failed to stay on topic or exhibited troll-like behavior intended to hijack the discussion at hand.

    3. YOU SHOUTED YOUR COMMENT IN ALL CAPS. This is hard to read and annoys readers.

    4. You have issues with a business. Have a bad meal? Feel you were overcharged at the store? New car is a lemon? Contact the business directly with your customer service concerns.

    5. You believe the newspaper's coverage is unfair. It would be better to write the editor at This is a forum for community discussion, not for media criticism. We'd rather address your concerns directly.

    6. You included an e-mail address or phone number, pretended to be someone you aren't or offered a comment that makes no sense.

    7. You accused someone of a crime or assigned guilt or punishment to someone suspected of a crime.

    8. Your comment is in really poor taste.

    9. Don't write a novel. If your comment is longer than the article you're commenting on, you might want to cut it down a bit. Lengthy comments will likely be removed.
Add Comment
You must Login to comment.

Click here to get an account it's free and quick