Pension reform must eventually be carried out
Another budget session has come and gone without a remedy for Pennsylvania’s looming pension crisis, which threatens to rob state government’s future ability to fund needed human services programs and other essentials.
Gov. Tom Corbett has promised to revisit pension reform in the fall. Many people think it is even more unlikely then, as lawmakers get closer to next year’s election realities and fear upsetting some of their pet constituencies.
But good legislation is good politics.
And pension reform presents that opportunity.
Start by not reneging on the benefits promised to existing workers under the two pension plans.
But insist on changes in the future that make the state’s pension obligations more predictable.
The state is in this mess because its two pension plans assume a 7.5-percent return on investments and assume future lawmakers will retain the current payment schedule. Both assumptions have proven false in recent years, leading to a $47 billion and growing pension crisis.
The solution is to put newly hired and future state employees on a defined contribution plan that carries predictable costs. Opponents of such a plan can rationalize all they want, but this plan would carry the one crucial element missing from the current one predictability.
There’s nothing punitive about asking future state employees to live within the same pension parameters that most of the rest of the workers in Pennsylvania live with.