June 02, 2011 08:24 PM UTC

Rosen argues for gov't pension privatization, despite his personal investment losses

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• by: Jason Salzman

(Thank you Wall Street, may I have another! – promoted by Colorado Pols)

A reader of my blog recently suggested that I ask KOA’s talk-radio host Mike Rosen if his personal investment losses, which made a big splash in the local media a few years back, gave him any qualms about his argument for the privatization of PERA, Colorado’s pension plan for government workers.

In 2009, Rosen told the Rocky Mountain News that he had invested a “seven-figure” sum, roughly 80 percent of his net worth, with the  Boulder-based Agile Group, which invested indirectly with Bernie Madoff. The Agile Group, which Rosen had promoted on his radio station, suspended redemption requests, and Rosen told the Rocky he lost a lot of money.

“I might have to work for more years than I had planned and I might not be able to retire as comfortably as I had planned,” he told the Rocky.

But his own experience doesn’t seem to have affected his view that the government cannot afford to guarantee the pension plans of its workers. Here’s what Rosen emailed me:

The “retirement money” of government employees under PERA isn’t protected by PERA, it’s protected by the taxpayers who are forced to cover any PERA shortfalls; the very same private sector taxpayers who are relying on their own “unprotected” 401(k)s for retirement income.  PERA’s investment portfolio includes mostly private sector stocks, bonds and investment funds.  If PERA switched to a defined contribution plan for future retirees, those government workers would be on equal footing with private sector workers.

Government workers who want more investment security could direct their 401(k) defined contribution plan investments to Treasury bills or FDIC insured accounts which offer lower returns in exchange for more security.  That’s the kind of choice private sector employees on defined contribution plans have to make, including me.  “Guaranteed” defined benefit pension plans are no longer viable.  Future taxpayers shouldn’t be held liable for the irresponsible promises made by past, current or future politicians of guaranteed retirement benefits to government workers.  In Flemming v. Nestor (1960), the US Supreme Court ruled that not even Social Security benefits are guaranteed and can be changed by Congress at any time.    

My personal investment experience hasn’t changed my options.  And no one is guaranteeing me defined retirement benefits.

Maybe the government should guarantee everyone’s investments in anything.  We’ll just add those future liabilities to the national debt.  That’s absurd, of course, but I wouldn’t put it past some budding socialist to demand it.