YOU'VE WORKED HARD. You've paid into the system. So, you think your defined-benefit pension—that guaranteed monthly payment—will be there when you retire. What you aren't so sure about, however, is your health benefit.

In the last issue of Public Employee Advocate, members were asked: What's the biggest threat to your retirement security? Many members cited affordability and access to healthcare as their primary concern. Others cited loss or reduction of their defined-benefit pensions.

There's good reason to be concerned. There are perennial debates about the ability of governments, as employers, to meet the defined-benefit pension and retiree healthcare obligations.

Regardless of which one poses the more serious risk to your financial security in retirement, the solution rests in public policy.

"Don't take any of the benefits you have for granted," advises Dennis Anderson, director of retiree programs for the New York State Public Employees Federation (PEF); and know whether your defined-benefit pension is guaranteed by law or by state constitution.

In New York, the defined-pension benefit is guaranteed not to be reduced under the state constitution, but retiree health insurance benefits aren't, he says. Anderson believes that if New York members don't fight to keep retirement benefits, elected officials may further increase health insurance deductibles and out-of-pocket maximums to shift costs to retirees on fixed incomes.

The politics of defined-benefit pensions

"Every single person who has a defined benefit should be worried," says Geri Madrid-Davis, executive director of the National Public Pension Coalition. The coalition was established in 2006 by the AFT and other labor unions representing public employees to counter efforts by elected officials and anti-government activists to diminish or eliminate defined-benefit pensions.

The assault is noteworthy. Ninety percent of state and local government employees participate in defined-benefit pension plans, which provide a guaranteed benefit in retirement, much like Social Security.

In some states, plans are hemorrhaging because governments, as employers, weren't contributing their share when the stock market was booming. Then the market tanked. The result: unfunded liabilities. In other words, pension funds have been shorted the money needed to pay promised benefits because employers didn't pay their share of contributions when the market was up.

Take New Hampshire, which has a $2.8 billion unfunded liability in its system for public employees at all levels of government. A review of the system's funding revealed that 21 percent of its assets are employee contributions; 15 percent of assets are employer contributions; and 64 percent of assets are from investment returns. The average pension benefit is $17,640 annually.

While the New Hampshire system is an example of chronic underfunding on the part of state and local governments, Davis emphasizes that even well-funded plans are being targeted by those who have a vested interest in divesting the $3 trillion in state and local government plans into individual defined-contribution investment accounts.

"I can imagine the salivating that takes place over that money, and how much could be made in fees," she says.

"I think it is hard these days to make arguments for defined-benefit plans because I think we have reached a point in our society where the bottom line is everything and it is cheaper for employers not to offer one," says Mark Moyle, a member of Connecticut's Administrative and Residual Employees Union.

Moyle, an associate research analyst with the Department of Social Services, knows the intrinsic value of his defined benefit. It's been reinforced as he's watched the value of his personal investments decline during the current stock market downturn. For people with defined-contribution plans like 401(k)s, Moyle wonders: "What do these people do when the economy crashes?"

Although states have been tinkering with their defined-benefit systems for decades-increasing employee contributions and changing formulas for how the monthly annuity will be calculated—today's debate is largely ideological.

Anti-tax and anti-government groups want defined-benefit plans eliminated. The American Legislative Exchange Council offers its members "model legislation" to do just that. Putting workers in charge of their own retirement is a plank in Americans for Tax Reform president Grover Norquist's blueprint on how to cut the size of government in half by 2025. Such groups encourage legislators to underfund public pension systems, which creates a phony crisis—a crisis that is blamed on employee benefits.

Achieving universal healthcare coverage

"So many of our folks who have a defined benefit are saying a large portion of their pension is going to pay for medical expenses," says Davis of the pension coalition.

PEF's Anderson says the biggest concern among the union's retirees is the lack of a full cost-of-living adjustment (COLA) and that the existing COLA doesn't include medical or energy costs. The average benefit payment in 2007 to retired public employees in New York, including police and fire fighters, was $16,202. "It's not overly generous," Anderson notes.

Davis says in the four states where the pension coalition is currently engaged in efforts to protect public employees' retirement security—Alaska, Kentucky, New Hampshire and Rhode Island—three of the states deliver healthcare to retirees through the pension system. "It speaks to what is driving these changes," Davis says, adding that Alaska's 2005 conversion to a defined-contribution system was "driven by the unfunded liability of healthcare costs."

Healthcare reform—achieving universal coverage for all Americans—is a central priority of the labor movement, and reaching this ambitious goal is no easy task. We must make an unprecedented effort to ensure that the values of working families—not corporations—are driving the terms of the national debate around healthcare.

Social Security: Are you covered?

While 96 percent of the nation's workforce participates in Social Security, there's a significant number of state and local government employees who do not. For some respondents, the biggest threat to their retirement security is two provisions of the Social Security Act that reduce or eliminate Social Security benefits for retirees who receive a government pension.

The provisions are: The Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP). The GPO reduces the Social Security spousal benefit by two-thirds of the government pension benefit. The WEP reduces Social Security benefits for workers who earned both their own Social Security benefit and a government pension not covered by Social Security.

"In our view, it is inherently unfair, inequitable and unjust to deny employees their earned Social Security benefits because they happen to also have earned a retirement from their employers, who happened to be a public employer," John O'Sullivan, secretary-treasurer of Texas AFT, told members of the U.S. House Ways and Means Committee's Social Security Subcommittee, earlier this year. O'Sullivan urged Congress to repeal the rules and pass the Social Security Fairness Act.

O'Sullivan gave the example of a public employee who retired after 25 years and qualified for a monthly pension of $1,103 from the state. Because her spouse receives Social Security, the GPO eliminates the monthly $540 Social Security benefit she should have received as part of her spousal benefit.

"It is ironic that spouses who never work a day receive the full benefit, while hardworking public employees lose any spousal benefits," O'Sullivan said. "I don't have to tell the members of this subcommittee that $540 a month makes a significant difference in the life of a retiree."

The AFT supports full repeal of the GPO and WEP provisions and passed a 2002 convention resolution on the topic. The challenge: Repeal would cost about $80 billion over 10 years.

Are you up for the accountability challenge?

"A good pension and retiree health combined with cost-of-living adjustments to protect the purchasing power of the pension are essential elements of a dignified retirement," says John Abraham, deputy director of AFT's research and information services department. "Without any one of these pillars, meeting housing, health and other living costs will be a struggle in retirement."

Protecting your retirement security is a fundamental priority for the AFT and its affiliates. Your involvement is key to effective legislative and political action.

"Union members and working people need to become more active, involved and informed and realize that we have a lot of power if we use it," says Wade Hannon, president of the North Dakota Public Employees Association's chapter at North Dakota State University in Fargo. "Part of what needs to be done is that members need to educate themselves more about how these retirement funds are operated, controlled and who has access to that money."

With the social value of a secure retirement being challenged by some politicians, AFT members, retired or still on-the-job, must impress on their governors and legislators the need to meet their promises to fund these benefits.

"The same characters who would privatize government services are the ones promoting this agenda," says AFT president Edward J. McElroy. "It is nothing more than an attack on working families; but it can be stopped through collective legislative and political action."