We love firefighters...but not their pensions

 

Over the last few years there has been much made over the amount of tax payer money going to finance public state and local employee's pensions.  The fact is that many pensions have been underfunded for years and were skating by on investment gains without planning for any issues (such as the recession) in the future.  So are these pensions good or bad?  In this media driven world sometimes the real answer isn't as black and white as it is portrayed.  A pension is only as good as the people who run it.  Many states like North Carolina, New York,  Wisconsin and North Dakota have run relatively conservative plans that did not crash when the market did.  Other states such as California and Illinois are struggling to fulfill their commitments.  So how does this controversy effect firefighters and what effect will it have on the field as a whole?

Job Applicants

Being a firefighter or other public employee is generally not a great way to strike it rich.  Salaries are modest and enough to live a comfortable life, but generally do not have as high of a ceiling as most private sector jobs.  To offset this many state and local governments use things like pensions and good benefits as a way to attract workers that otherwise may go into the private sector.  A public backlash against pensions that results in the elimination or drastic reduction in payout of pensions will deter potential job applicants.  This will weaken the hiring pool for most state and local governments.  Less qualified applicants means a poorer quality of service and possible erosion of confidence the public maintains in its emergency services.

Current Firefighters

If pensions are eliminated or severely reduced many current firefighters may look for more lucrative work in the private sector or switch career paths completely.  Currently most fire department's  pension plans require 20 years of service to be vested and collect a guaranteed check, with 30 years of service required to max out the potential amount of these pension checks.  If there is no incentive to stay at the same department then many firefighters may jump at the possibility of more money elsewhere.   There are many private firefighting firms that pay around $100,000/year with no taxes for firefighters to go on high risk assignments in Iraq or Antarctica.  These jobs could look even sweeter if compared to a job on a local department with no pension.  Many firefighters have college degrees and may feel they would be better served working in a completely different area if pensions are eliminated.  In fact a firefighter I personally worked with left the department for a job at an engineering firm when the city council was debating the possibility of ending the pension system.  Losing qualified firefighters due to pension elimination or restructuring will result in less experienced people in leadership positions and the possibility of lower quality of service for the public.

Compromise

So how can this be fixed?  I think the answer is compromise.  Public employees and government leaders need to come up will fair pension systems that are run conservatively.  No city should have to go bankrupt or deal with financial crisis just to pay a bunch of retired firefighters.  Making sure that pensions are fully funded is the key to avoiding problems.  This will require more money being contributed from firefighters and governments.  It will also require planning for moderate to low return on investments instead of counting on high returns to pay retirees.  There are many successful pensions that struggling pension systems could use as a template to ensure a sound fiscal future for both governments and firefighters.


References:

http://presreed.com/2010/09/15/217/hip-young-woman/

http://www.huffingtonpost.com/kil-huh/public-employee-pensions_b_1707659.html