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AFT Calls for End to Pension 'Spiking,' Says Most Benefits Are Fair

The American Federation of Teachers, the nation's second-largest teachers' union, is calling for an end to pension "spiking" and "double-dipping," while arguing that the vast majority of public retirement benefits are modest, not excessive, as critics claim.

The executive committee of union, which has 1.5 million members, approved the policy and released a report with recommendations today. Those policies are the product of a special committee the union formed to study pension issues.

Retirement benefits have received a ton of attention from state officials in recent months, particularly Republicans, who have argued that teachers' and other public workers' pensions systems are overly generous and too costly for taxpayers.

The AFT policy document, "Strengthening Retirement Security and Building a Better America," pushes back against those claims. It says that a recent estimate of the yearly retirement benefits for state and local government workers was about $23,600, despite reports of much higher payouts.

The union also contends that despite some public officials' desires to switch teachers and other public employees away from defined-benefit retirement plans, the alternative, 401(k)-style systems, have a mixed record of providing workers with retirement security. When states have fallen into trouble with high unfunded liabilities in their pension systems, it's often because states skimped on their obligations, not because the benefits were too generous, the AFT says.

Even so, the union acknowledges that some pension practices inflate costs, and it calls for an end to them. One such practice is the spiking, or increasing compensation near the end of a worker's career in a way that is designed to sweeten benefits payouts.

The AFT also recommends doing away with double-dipping, which the union defines as an employee who retires, then is rehired by the same employer, receiving both a pension and a salary. In addition, it says policymakers should establish a "maximum benefit ceiling" to guard against excessive defined-benefits payments. Numerous state and local policymakers have called for ending those practices.

"Pensions need to be well-funded and well-managed because they help retain people who provide services that taxpayers depend on," AFT President Randi Weingarten said in a statement. "But practices like end-of-career spiking and double-dipping have to be addressed."

The document also notes that many teachers do not collect Social Security benefits, and says it's time to have an "open discussion to consider the inclusion of public employees in the program." The union plans to convene a summit of public employee unions to discuss the idea.

The document also states that retirement security should be the "shared responsibility of employers, employees, and the government," and that both employers and employees should contribute to retirement benefits. That would appear to be a significant recommendation. In at least one state, Florida, teachers and other public employees were not required to contribute anything, until lawmakers required them to chip in this year. Some states appear to have similar practices.

Whether the document gives the AFT more of a say in shaping state efforts to curb pension costs remains to be seen. Many state lawmakers seem to have a very different view of the generosity of teachers' benefits than educators do. The union seems intent on shaping the views of policymakers—and the public—on the charged issue.

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