HARRISBURG PA – The seemingly-perpetually-underfunded Pennsylvania public pension system, which in past years has added to budget woes in the Pottsgrove School District, was the subject of discussion Tuesday (May 1, 2012) by the House State Government Committee. It’s considering a proposal to put all future state workers, teachers and lawmakers into a 401(k)-style plan that defines contributions, not benefits.
The state’s two major public pension systems, the State Employees Retirement System and Public School Employees Retirement System (PSERS), have an unfunded liability of more than $36 billion, The Pennsylvania Independent online news service reported Wednesday (May 2).
Pottsgrove’s share of payments to cover its teachers’ pensions under PSERS has climbed annually by significant amounts. The Board of School Directors claims it has been “proactive” in setting aside money to cover those costs, but some members argue that cash could be better used to cover other educational costs or reduce tax increases.
“Our pension plans are taking on water every single day,” said state Rep. Eli Evankovich, R-Westmoreland, the sponsor of one of the proposals. “We need to plug the hole, and then start to bail the water out. This begins the process of plugging the hole,” he said of the committee’s talks.
Although he has not publicly offered a recommendation to solve the problem, The Independent said Gov. Tom Corbett also supports a 401(k)-style pension plan.
In a defined benefit plan, benefits are guaranteed based on a formula that includes years of service and salary. A defined contribution plan allows workers to save for retirement and invest as much or as little as they choose.
- Read a story by reporter Eric Boehm, titled “PA gov looks at 401(k)-style plan to curb pension crisis” and published Wednesday by The Independent, here.
- Watch a video, above, of Gov. Corbett talking about the pension problem, or see it at The Independent’s YouTube channel.