Public Pension reform has been a repeated topic on the Sun-Gazette editorial page. And although the call for reform has softened a bit over time, from switching all employees over to a 401k plan to now just new hires, the call for reform has its errors.
1) No plan will be properly funded if the Government and School Districts fail to pay their share. A large part of the current problem is due to the fact that, while the employees continually put in their share, the Government(s) did not. And if the Government again fails to put in it’s share on the 401k we’re back in the same boat.
2) Switching to a 401k has no effect on the current underfunding. In fact switching new employees to a 401k will make paying back the current system even more painful for the Governments and School Districts. No longer will the respective Pension Managers be able to use money coming in to pay for it’s pensioners. Unlike a defined benefit plan where the money all goes into one big pot, the money in a 401k type plan belongs to the individual and should not be used to pay benefits to others.
Act 120 of 2010 addressed the problem of underfunding with real solutions and, if allowed to work as intended, will fix the problem. The current call for change, while it may look good, does not address the problem that needs fixed. The SG Editors do no favor to the public by endorsing a change that has no effect on the problem at hand.
Submitted by Virtual Newsroom