Sorrows and free pensions
Yossi Sarid rebutted my column about noncontributory pensions with elegance yesterday. He wrote eloquently about sorrows, difficulties, alienation and detachment and, as always, won our hearts with his clear, erudite, honest and powerful writing.
If Sarid were only a commentator, we would settle for that. But for 32 years Sarid was a Knesset member, and among the most important and active of them all. It is therefore hard to accept his view, which boils down to something like this: Dear TheMarker, don't hassle me with numbers. I don't understand them or care about them. I am a humanist and my mind is occupied with the sorrows and troubles of mankind."
We shall admit it up front: we are people of numbers. Not because we harbor any special affection for them - we'd surely be happier in a world consisting of nothing but words, fables and witticisms. But as the devil would have it, we need numbers to understand the economic processes that cause the sorrows and woes, and more importantly, to find solutions.
The issue at stake is not Yossi Sarid, who is one of the most distinguished, modest men the Knesset has known. It is not about left or right. We devoted our column to him only because after Haaretz reporter Zvi Zrahiya exposed the pension terms of Knesset members, a certain retired MK claimed that every citizen - including journalists and janitors - are entitled to similar pension terms.
In his rebuttal article, Sarid told of the help he has extended to people throughout his years as a public servant, and that throughout his career he served as an address to the oppressed and the needy. These actions are praiseworthy but they have nothing to do with our point, which is the noncontributory pensions given to Knesset members and to all too many other government officials, which shelters them from the economic reality of most Israeli citizens.
Sarid writes that he read in the paper that he's a millionaire, and asked, "Where's the money?" Simple: In his bank account, each month. As a veteran Knesset member and ex-minister, Sarid receives 100% of his last salary as a minister. Most Israelis get at most 70% of their average salary. Is his pension high? Low? medium? That is not the point, the point is the mechanism that detaches Sarid from his voters, and he doesn't even realize it.
Sarid claims that if he had stayed in the private sector, he'd almost certainly have a higher pension. That is far from sure. To retire on NIS 35,000 a month, the man on the street has to be earning NIS 50,000 to NIS 60,000 a month by the end of his career, which is a rarity. In the private sector Sarid and his employer would have had to set aside 18% of his salary each month for his pension, but as things are, Sarid set aside not one penny.
But the most important issue that requires debate is Sarid's claim that he opposed Benjamin Netanyahu's reform of the pension funds, so we shouldn't complain to him that the rights of people insured by the funds were slashed, while recipients of noncontributory pensions were spared the knife. Sarid reminds us that we at TheMarker supported the reform of pension funds while he as a socialist opposed them.
This may be the place to explain, again, that the "reform of the pension funds" was no stroke of genius by Netanyahu or some treasury clerk. It was not the child of capitalist or socialist ideology. The need to scale back pension benefits, for everybody, had been known for years: the pension funds were running gigantic deficits. To close the deficits, there are three options: cut retirement benefits, increase the amount people set aside from their salaries, or impose more taxes.
The only way to preserve the benefits for hundreds of thousands of Israelis would have been to for the government to infuse tens of billions of shekels, maybe more, into the pension funds. Where would the money have come from? From cutting other expenses, naturally. At whose expense? The taxpayer, that's who, mainly the weak.
It is all very well to oppose the pensions reform. Very noble. But in the same breath, the opponent has to provide a way to finance the deficits. A person receiving a noncontributory pension, which is sheltered from reforms, should understand that.
Sarid denies being detached or alienated. He may not be detached from the poor, as he says, or from the social ills of the people. But like many others in the uppermost echelon of the public sector, he fails to understand the retirement reality of most Israelis, and the financial danger looming over a country whose actuarial liabilities mushroomed from NIS 100 billion to NIS 300 billion in the space of a decade.
These pensions are not recorded anywhere. They have skyrocketed at terrifying speed. In 10 or 20 years time, they will be swallowing up massive chunks of the national budget. They have kept our elected representatives in Jerusalem in a bubble of unreality. But at the end of the day the bill will be presented to the very oppressed and the needy whose troubles Sarid knows so well.