Tuesday, November 19, 2013

Abusing the Pension System

Abusing the Pension System

The President of Wake Tech Community College receives a salary of $248,000, plus $45,000 in additional benefits.  This package makes Stephen Scott one of the best-paid community college presidents in North Carolina.   Mr. Scott’s pension is also getting a nice boost because the additional benefits such as a car allowance, supplemental retirement benefits, and health insurance will be used in the formula that determines the final calculation of his pension.  These practices are detailed in the News & Observer. [1]

The trustees at Wake Tech defend this practice as a necessary way of retaining talent.  Of course, this tactic doesn’t apply to rank and file employees at Wake Tech who haven’t received much if any pay increase in the last five or six years, and who don’t get supplemental benefits.  In addition, a large portion of the faculty serves in part-time roles and don’t qualify for any benefits at all.  The community college system is supposed to be the engine that prepares North Carolinians for meaningful employment.  Ironically, the system does little to provide its own employees with a sustainable living, with the exception of those at the top.
Phone Center (2000)
The practice of enhancing pension benefits or spiking salaries just before retirement is not confined to Wake Tech or North Carolina, and it’s not a new practice.  During my time as a lawyer in New York government in the early 1980s, I had to write a steady stream of memos to the Governor recommending that he veto special provisions conferring special pension benefits on the politically connected.  Fortunately, Governor Carey didn’t mind wielding his veto pen.

Cabinet members, college presidents, athletic coaches, legislators, and other key political appointees have gamed the pension system for years.  As the News & Observer rightfully points out, these practices are financially unsound, because they are not accompanied by the appropriate contributions from employers and employees.  They simply confer an unfair advantage on the connected and undermine the well being of the pension plan for everyone else.

[1] http://www.newsobserver.com/2013/11/18/3373657/for-wake-techs-leader-the-perks.html

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