Yaw: State must deal with pension problem

Pennsylvania’s looming $41 billion pension shortfall for state workers and public school employees will be one of the challenges lawmakers will face this year in Gov. Tom Corbett’s budget, which he will unveil Feb. 5.

State Sen. Eugene Yaw, R-Loyalsock Township, said the issue cannot be put off.

“It’s a huge problem,” he said. “Where do you get $41 billion?”

Corbett said his budget is based on structural changes to the pension plans he wants that would modify benefits for existing and new employees, but not for retirees, according to the Associated Press. It also would not affect retirement funds that already have been earned, Corbett said.

Yaw said new state employees coming into the system should get a 401k-type of pension plan, instead of a defined retirement amount that is promised by the government.

Future contributions to support state employees’ retirement and health care are skyrocketing, Yaw said.

“I don’t think anybody wants to raise taxes and put it in that pension plan. There are other ways to do it,” he said.

One idea is to issue a pension bond, which would borrow needed money now and spread the cost over 30 years into “bite-sized pieces that are palatable,” according to Yaw.

“I don’t think the pension plan has been mismanaged. I think that the pension plan got hit by the economic conditions,” he added.