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Public Employee Pension Forfeiture

a Louisiana Federation of Teachers Statement of Concerns

During the 2008 First Special Session of the Louisiana Legislature, a number of pension forfeiture bills were introduced.  During this Regular Session of the Louisiana Legislature, at least six more instruments are being considered. Therefore, what follows is a broad overview of the Federation’s concerns with diminishing or removing constitutional protections of public employee pensions. 

A Basic Understanding

No one supports rewarding any public employee for dishonorable service.  The more egregious the breech of public trust or heinous the offense involved is, the greater the desire is to dispense swift, severe, and appropriate punishment.

Private employee pensions are protected by ERISA (Employee Retirement Security Act), which prohibits pension forfeiture in the private sector, while public employee pensions are not so protected. Public employee pensions depend upon the protections provided in each state.  The Louisiana Constitution currently protects public pensions from being “diminished or impaired.”

The Question of Appropriateness

Critical to the consideration of forfeiture legislation is the establishment of a clear distinction between “real justice” and the concept of “poetic justice” that often accompanies such a discussion.

Retirement benefits contribute the major component of an employee’s retirement income, and it often serves as the chief financial security for employees, their spouses, and any dependents. Thus, pension forfeiture may have unintended consequences and unintended victims.

Whether forfeiture is fair, just, and appropriate punishment depends on one’s understanding of the nature, purpose, and legal status of pensions.  The Federation embraces the generally accepted, post 19th century theory of pensions; that is, pensions are an earned benefit for good service provided and financial contributions made up to and until such good service is terminated.  

When considering pension forfeiture --- the forfeiture of some or all benefits earned as a result of previous good service --- one should consider whether we would be arguing for the forfeiture of savings accounts, equity investments, or property if the employee had no pension plan, but had been allowed to opt for higher wages in lieu of a “guaranteed, deferred benefit.”

Forfeiture as Deterrence

Despite a minor pension forfeiture movement in the United States, there is no evidence that forfeiture serves to deter crime.  In the area of public education and in the interest of the protection of children, the primary impetus must be on prevention.  The qualifications, character, and backgrounds of those who apply for positions within our public schools or other institutions that serve our children should be screened meticulously.  Any individual convicted of any crime against a child should be punished to the fullest extent of the law.  Prevention first --- appropriate punishment when all else fails.  The Federation avers that punishment must be fair and proportionate to the crime.  

Punishment Appropriate to Fit the Crime … to the fullest extent of the law

Punishment dispensed should meet the crime committed.  Criminal fines, civil suits, imprisonment, and/or orders of restitution to the public entity or individual victims should all be in the public’s arsenal of just punishment for serious violations of the law and/or the public’s trust.  The severity of these penalties should increase with the seriousness of the crime.  

Since pension forfeiture is a “financial life sentence,” forfeiture may have the unintended consequence of burdening taxpayers with providing for innocent spouses and dependents --- and ironically, at some point, the perpetrator. 

Therefore, the Federation remains opposed to any changes in the Louisiana Constitution that allow for earned pension benefits to be impaired or diminished. 

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