A recent letter to the editor mentioned that employer pension contributions for PA teachers will be 2.2 percent in the coming years. What is the problem? This could be affordable, and prompted some research.
Public School Employees Retirement System (PSERS) Employer contribution rate:
Now I understand the problem! Thank goodness for ACT 120 of 2010! The pension component of the rate was capped at no more than 4.5 percent from the previous year.
Employer contribution rate was reduced in 2001, before an economic downturn. This employer rate should have stayed down just like the private sector. Everyone suffered losses in the market. Private employer contributions are negligible in comparison with above chart.
Apparently, the 2.2 percent is the multiplier used for pensions along with years of service and the average of 3 years of highest salary.
PSERS expectation for future pension funding, along with healthcare benefits and pay raises are unaffordable to the taxpayer.
One way to slow the bleeding is to have new employees convert to an alternative retirement plan. I could not comprehend why the present teachers’ union opposes this measure. It finally dawned on me! There will be no new money in the PSERS fund. Retirees may not be guaranteed their “full” (unrealistic) future pension.
This information has encouraged me to look into state nurses and law enforcement, also mentioned in the article.