The Tale of the $204,000 Pension

Last week, our Retirement Planning columnist, Tammy Flanagan, wrote about how federal retirement benefits have changed over the years. Most of the change, she noted, has been of a positive nature (although many federal employees still think the old Civil Service Retirement System provided a much better safety net than the Federal Employees Retirement System). 

At the state and local level, though, the changes have been even more dramatically positive -- at least up until recently -- especially in certain areas. And that has led to a proliferation of news stories in the past several years about local officials who have retired with huge pension packages.

Today, at The Atlantic, Conor Friedersdorf notes how one of these stories is cycling its way through the media again. It involves former Stockton, Calif., police chief Tom Morris, who was able to retire with a $204,000 pension after just eight months on the job. (He quit because he was threatened with a furlough.) He later took another government job, as an investigator with the San Joaquin District Attorney's Office.

The story isn't new; it was reported when Morris quit in 2008. But Bloomberg News recycled it this week, and others once again picked up on the story.  

What's noteworthy here is that these kinds of tales just aren't going to go away, for two reasons:

• They really strike a chord with Americans struggling through what is at best a tepid economic recovery from a major recession. 
• States and localities are struggling with major budget problems that they can't wave away  by borrowing or printing money, like the federal government can. 

The result is likely to be not only pressure to reduce pensions at the state and local level, but to trim federal retirement benefits, too. So far, at the federal level, only newly hired employees have been affected. But for awhile earlier this year, it seemed like there was a vote to cut benefits in Congress every 10 minutes. As long as unemployment remains stubbornly high, and private -sector employers continue to scale back their retirement packages, you can expect that to continue.