Half-Million Dollar Annual Pension by age 80? It did happen here.

There has been a lot of talk about government pensions recently. Wisconsin policymakers are still battling over reforms, but New Mexico policymakers are also working on modest, but much-needed reforms. We at the Rio Grande Foundation have also outlined reform ideas.

But a specific government pension case recently came to our attention (outlined in our new policy paper) that really took us aback. As this example illustrates, the granddaughter of a retired firefighter is entitled to a lifetime pension courtesy of New Mexico taxpayers. If she lives to 80, she could collect an astounding $14.5 million and would collect an astonishing $500,000 annually by her 80th birthday.

Simply put, this particular case should be prohibited via reform. But, more is to be done. Defined benefit pensions must be done away with and replaced by defined contribution pensions.