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Sunday, July 21, 2013

Are public pensioners a privileged class?

The next time you hear about those greedy public employee pensioners (and in Illinois there are many instances of corruption), let’s not forget the larger picture of who collects these pensions. From the New York Times:

But the average pension benefit in Detroit is not especially high. The average annual payment is about $19,000, said Bruce Babiarz, a spokesman for the pension funds. And it is about $30,000 for retired police officers and firefighters, who do not get Social Security benefits, he said. Some retired workers get larger pensions, though: about 82 retirees who either worked many years or had high-salaried jobs are paid pensions of more than $90,000 a year, he said.

Among them is Isaiah McKinnon, who was the city’s police chief in the 1990s and whose pension is just over $92,000 a year. Dr. McKinnon said he and other officers earned their retirement money by serving in a dangerous profession. Dr. McKinnon was shot at eight times while on the job and was stabbed twice, and he has scars from the attacks on his neck and abdomen, he said.

Dr. McKinnon, who holds a doctoral degree in education administration, is an associate professor at Detroit Mercy University. He expressed concern about retired rank-and-file officers whose pensions were based on salaries far lower than his.

I’m sure many of the pensioners are better off than the average unemployed person in Detroit, but that’s hardly the point. The point is that we aren’t talking about some class of rich people, but some class of lower middle, maybe middle class people.  And we’re talking about a city which (like Illinois) made promises but never funded these promises AT THE TIME THEY WERE MADE. It’s not as though there was some huge surprise; it was a dishonest game from the word go.

And speaking of dishonest games

Detroit was also run corruptly for a long time, and the pension funds were not immune to this. A pension fund is basically a big pile of money. And so we have the same issues in Detroit as in Illinois:

Ronald Zajac, of Northville, Michigan, the general counsel of Detroit’s two pension funds, and Paul Stewart, of Detroit, Michigan, a former trustee of Detroit’s Police and Fire Retirement System, were both charged today in a superseding indictment with participating in a bribery and kickback conspiracy involving over $200 million in investments before the two city of Detroit pension funds United States Attorney Barbara L. McQuade announced today….

Zajac and Stewart were added as defendants in a superseding indictment that had already charged former city Treasurer Jeffrey Beasley and investment sponsor Roy Dixon with the bribery and kickback conspiracy.