Opinion Article - CalPERS – Back to Basics? by Al Segalla

Are public employees human beings?

If they are, then, according to our Founding Fathers and the 5^th and 14^th Amendments to the US Constitution, they have natural rights to life, liberty and property.

This fact seems to be ignored by the legislature, the Public Employees Retirement System, local elected and unelected public officials and the Unions.

Doesn’t the employee own their mind and body? 

When compensated for use of their mind and body, isn’t the money thus earned their property?

If the above is true, then it seems proper that the employee and retiree be allowed to control their money. That means they should decide how the money is invested and if they wish to be part of an employee based retirement system or even choose another use for their money.

The present politically and union driven system is based on unsound financial principles similar to a Ponzi scheme whereby an obligation is placed on new employees and taxpayers to be responsible for lifetime retirement benefits of public employees. This is called a Defined Benefit Program, which creates unfunded liability and tends to bankrupt the employer. Consequently this could actually result in the retiree losing all their invested money. There is danger of this happening now as a result of the defunct Central Sierra Planning Council discovering and estimated 1.6 million dollars in unfunded retirement liability for past employees.

A better approach would be a new system whereby the employee could choose to invest and would have control of the investment.  No politicians, union officials or bureaucrats would be allowed to touch the employee funds. On the other hand, after retirement, no further compensation from the employer or taxpayer would be likely.  Also, there would not be any redistribution of benefits, whereby some employees who invest large amounts have their money taken and given to those who invest less.  Another benefit of an employee controlled system is the likelihood of more prudent investment decisions, as there would be no taxpayer bail outs.

Because public employees are human beings with property rights, doesn’t it make sense for them to be allowed to exercise those rights by controlling their own retirement system?