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Pensions

May 8, 2013

The Sun-Gazette's recent editorial on public workers' pensions correctly points out that a recently reported $140 million surplus in state reimbursements for Pennsylvania's school district pension......

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(17)

mikekerstetter

May-10-13 3:59 AM

ToTex, I forgot to add that in 2010 the pension was reformed for new hires, who are paying in a higher percentage. Also, the Government is now paying in more money, and have been scheduled to pay increasing amounts over a number of years to pay off their obligation that hadn't been previously paid. Those increased payments is what has everyone's panties in a bunch and why they say there is a crisis in the pension systems. It's only a crisis because they failed to pay what they owed in the first place. The old saying "a lack of planning on your part doesn't constitute and emergency on my part" seems to apply well here.

It is interesting to note, and I was surprised when I read it, that some School Districts had to foresight to say "no thank you, we're going to end up paying our share at some point" and continued to fully fund their obligation and are now spared these 'balloon' payments now. Sadly, too many didn't have that foreknowledge.

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ToTEXASfromPA

May-09-13 7:00 PM

Mike,

Thanks. It would be nice if investments covered obligations that it could be switched over to a defined contribution program.

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mikekerstetter

May-08-13 5:45 PM

Also keep in mind that SERS was, at one point prior to the Government shorting the fund, funded at 125%, meaning it had more money in it than it needed to pay it's liabilities. So, it's not the system that's the problem.

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mikekerstetter

May-08-13 5:35 PM

ToTex, Over the past 10 years investment income has contributed 69% of the Fund; while members (the employees) have contributed 21% and employers (the Government) just 10%.

All of it goes into investments of some kind. Right now SERS (State Employee Retirement System) has $25.3 billion and PSERS (Public School Employee Retirement System) has $49.7 billion.

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mikekerstetter

May-08-13 5:21 PM

Enigma,

I've explained this difference between private and the PA public pensions a couple of times.

The PA Pubic pensions were not negotiated by any unions. They were enacted by laws voted on by the legislature and signed by the governor.

The PA Constitution forbids breaking contracts. And even though the pension wasn't negotiated as a labor contract was negotiated, they are considered a contract with each individual employee. The courts have ruled many times that part of the payment these public employees receive is the pension they get when they retire. They have ruled that you can't change the pension in a way that diminishes the value of the pension once an employee is in that system.

So anyone who is in the pension plan can't be changed to a 401k, only new employees. And changing new employees to a 401k does nothing to address the problem of underfunding for current employees.

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DavidBross

May-08-13 3:36 PM

Two things: First, this issue affects all school employees and state employees, including legislators. We never hear about the other folks who receive these pension benefits. Second, while the deficit in the pension fund was created by the state allowing itself and districts to underfund their part, the big question is what to do now. For all recipients of this pension (of which I am one) trying to hold on to what is with no adjustments, may be a losing strategy.

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nobud74

May-08-13 12:07 PM

mikepaternostro, you are 100% correct. It is exactly the blind loyalty to parties that has us in this mess and the pols are laughing every day about it. They retain power and we fight between ourselves. Chuck won't see that. Not can't, won't.

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michaelpaternostro

May-08-13 10:19 AM

CM Reeder, is everything always right and left to you? Right or Left isnt going to matter when our country fails because of the massive crushing debt we are incurring right now. Get over the right and left and promote sound ideas for once. Use some common sense!Lets start a common sense party, No your not invited.

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philunderwood

May-08-13 9:37 AM

There’s a big difference between statements based upon facts and talking points.

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CMReeder

May-08-13 8:52 AM

I see the right is hauling out their talking points.

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USABorn

May-08-13 8:44 AM

Looks like the teacher unions are getting their talking points out!!!

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philunderwood

May-08-13 8:32 AM

Enigma is correct. Private industry has been switching to defined contribution plans for some time and it works out very well for both the employer and employee. The only employees not favoring defined contributions are those lacking the confidence to manage their 401Ks.

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enigma

May-08-13 8:00 AM

The writer's error was believing what his union told him. Many large companies were saved by switching from a pension to a 401K. Can anyone explain how it worked for them, but will not work for government? Unfortunately, you can't trust 'studies' anymore, because they manipulate the inputs to get the output they desire. Sometimes you just have to look around and use common sense. Eliminating pensions plans has saved money every time it has been tried and it makes sense that if you're not spending money, you've saved it. And this guy is teaching children.

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idiottwo

May-08-13 7:27 AM

I only hope that they are treated the same way all are. If the benefits are considered cadilac plans, per the new healthcare mandate, they should be taxed as others. No special treatment. Same for our Gov officials.

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ToTEXASfromPA

May-08-13 6:28 AM

I have no skin in this game but thought I would ask these questions anyway.

How much money is in the fund? Is much of it in the stock market? With the stock market at record highs, is now the time to convert to a defined contribution plan? At what stock market level would it be a good idea to switch everyone to a defined contribution plan and give people the option to invest it as they see fit?

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mikekerstetter

May-08-13 4:01 AM

Deb Kuhar-"Once the debt is paid, the system is very sustainable."

Had the debt been paid in the first place, we would not be at this juncture now. The problem you will run into is that there are a lot of people who think public employees should just roll over and accept the fact that the Government purposely shorted their pension funds and agree to take less than what was promised as part of their compensation for their service.

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Tedeaux

May-08-13 1:43 AM

Or we could raise the retirement age to 85!

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