Why is wealthy Westport trying to gut police pensions?

Police in Westport, Connecticut are resisting an attempt to slash their pension and partially replace it with a 401(k)-style plan. Such a move would mess with a tried-and-true system that promotes secure and orderly retirement, in favor of an inefficient one that harms workers with no benefit to taxpayers.

Westport is a latecomer to a trend that appears to have nearly run its course. A few years ago, the Wall Street Journal praised San Jose Mayor Chuck Reed for taking an axe to police and other public employee pensions. Along with Rhode Island Treasurer (later Governor) Gina Raimondo, Reed had become a public face of the pension gutting movement, leading a statewide initiative backed by hedge fund billionairesReed and Raimondo, both Democrats, were lauded by conservative think tanks and the Journal for taking on public-sector unions, ignoring the fact that they were courting more powerful interests—the financial industry and wealthy donors.

Similar initiatives followed in Dallas, Memphis, and Palm Beach, among other places. But as the Journal reported last year, in an apparent change of heart, cities that slashed police pensions were later forced to restore benefits or spend millions on retention bonuses in efforts to stem outflows of experienced officers. In Palm Beach, for example, 24 mid-career police officers left in the four-year period after the city cut police and firefighter pensions and partly replaced them with 401(k)-style plans, compared with just one mid-career officer in the previous four years. The exodus of police and firefighters to neighboring jurisdictions caused the city to incur millions in additional training and overtime costs. Five years later, the city reversed course, restoring pension benefits and dropping the 401(k)-style plans.

The pension gutting movement, which relied on shock-and-awe tactics and stoking the pension envy of taxpayers, lost some momentum as EPI and others pointed out that pension liabilities were being inflated for political purposes and that switching to 401(k)-style plans was unlikely to save taxpayers money in the long run. Costs in Rhode Island actually increasedafter Raimondo halved the state’s already bare-bones pensions and added a 401(k)-style plan—a fact she obscured  by delaying the repayment of legacy costs. Meanwhile, Raimondo, who had co-founded a venture capital firm before becoming treasurer, loaded up on these and other alternative investments before the state was forced to reverse course due to high costs and poor performance.

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