A Profile in Shamelessness

As public pension debacles continue to unfold around the country threatening both public services and the retirement plans on which millions depend, there are two possible avenues their defenders can pursue.  Option 1: work diligently and aggressively to understand the reasons and contributing causes to these current conditions and embark on necessary remedial actions and reforms.   Option 2: flatly deny that any pension sustainability problem exists and blacklist any organization that has the temerity to suggest otherwise.

Introducing the architects of option 2: the National Conference on Public Employee Retirement Systems or NCPERS, the self-proclaimed “Voice of Public Pensions.” According to its website, NCPERS is the largest trade association for public sector pension funds; providing a network for the large number of trustees, administrators, public officials and investment professionals who collectively manage nearly $3.7 trillion in pension assets held in trust for approximately 21 million public employees and retirees.  Membership includes unions, public pension funds, organizations representing public pensions or public employees, and the wide variety of businesses that service this industry (think big investment firms, banks, actuarial and legal firms, for example).

Trade associations are supposed to be aggressive advocates for their membership, and NCPERS delivers in a unique way.   Under the deliciously ironic theme of “promoting transparency” NCPERS has created what it calls its “Schedule A”  — a blacklisted group of state and national non-profit public policy organizations that “take biased and unreasonable positions that undercut the interests of public pension plan participants and beneficiaries,” and “engage in ideologically, politically, or donor driven activities to undermine public pensions.”

According to NCPERS “Schedule A” serves a simple purpose:  “Pension funds are naturally leery of paying fees to service providers that support organizations that intentionally undermine public pensions, and can use our list to identify potential conflicts.”  Or if you prefer a more Tony Soprano-like translation, “if you guys want a piece of our $3.7 trillion business, choose your friends very carefully.”  (Which might help explain J.P. Morgan’s stunningly contrarian conclusion in a widely circulated 2014 policy paper that “most states are in good shape” with respect to their long term pension and retiree health care obligations.  J.P. Morgan is a NCPERS corporate member.)

If the “Schedule A” membership roster was populated only with staunchly conservative organizations who are ideological opponents of public sector defined benefits plans, the blacklist might be at least understandable.  But it’s not.   The latest additions include the State University of New York’s Rockefeller Institute of Government— without question one of the most distinguished, credible, and influential fiscal policy education and research organizations in the nation.  And here is the kicker --  the Rockefeller Institute is a supporter of the concept that public sector defined benefit pension plans should continue to be viable and secure.

What sin has the Rockefeller Institute committed?  They have rigorously examined and exposed the significant sustainability challenges and large risks governments are assuming because of dangerous public pension funding practices enabled by faulty economics and bad accounting.   Plus they have the nerve to suggest the sustainability of existing defined benefit plans should also take into account the implications for the adequacy and cost of future public services.  

The Institute is not the only rather unusual name on the NCPERS “no fly” list.   The Brookings Institute, the Pew Charitable Trust, and the Urban Institute — three other distinguished public policy research organizations that will never be associated with anti-government, anti-public sector politics are also organizational non grata.   They, too, have raised concerns in their evaluations of the condition of these plans, their long term viability under the status quo, and their effects on public service delivery in the future.    The merits of all the arguments and analysis are irrelevant to NCPERS;  they get on the list just for raising important questions about the sustainability of these plans under current policies and practices.

What NCPERS should be doing — in the interest of its own membership and stakeholders  — is building policy informed by the evidence, information, and analysis these highly reputable good government organizations are offering.  What they should not be doing is sticking their collective heads deeper in the sand while trying to use economic muscle and influence to get others to join them in perpetuating shameless intellectual dishonesty.