Thursday, February 11, 2016

Pa. pension boosts taxpayer charges to $1 billion/year

As profits trail payouts

Pa. pension boosts taxpayer charges to $1 billion/year

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The Pennsylvania State Employees’ Retirement System pension subsidy will total nearly $1 billion on top of the state´s $5.8 billion payroll.
The Pennsylvania State Employees’ Retirement System pension subsidy will total nearly $1 billion on top of the state's $5.8 billion payroll.

The Pennsylvania State Employees’ Retirement System board voted today to boost the taxpayer-funded "employer contribution rate" to 16% of state workers' pay, from last year's 11.5%, blowing another hole in the state budget. The pension subsidy will total nearly $1 billion on top of the state's $5.8 billion payroll.

The rate would be even higher -- a surcharge of up to 31% on state paychecks, payable by the state treasury -- without the state law limiting the increase to 4.5 percentage points a year, SERS said in a statement. The rate is expected to jump again, to 20.5% next year.

That's because, despite $25 billion invested in hedge funds, real estate, buyout funds, commodities, and U.S. and foreign stocks and bonds, SERS assets are falling further behind its future liabilities, which SERS estimates at $43 billion. With relatively generous benefits enshrined in a 2001 pension law (though eligibility has been trimmed back in recent years), coupled with years of under-funding under governors from both parties, the plan is now just 59% "funded," down from more than 100% in the early 2000s. That's starting to approach the lower funding level of Philadelphia's pension plan, which covers an older workforce, and reports it's only 48% funded.

  

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PhillyDeals posts interviews, drafts and updates that Joseph N. DiStefano writes alongside his Sunday and Monday columns and ongoing articles about Philadelphia-area business.

DiStefano studied economics, history and a little engineering at Penn. He taught writing and research at St. Joe’s. He has written for the Inquirer since 1989, except when he left a few times to work at Bloomberg and elsewhere. He wrote the book Comcasted, and raised six kids with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, 215.854.5194, @PhillyJoeD. Read his blog posts at http://www.philly.com/PhillyDeals and his Inquirer columns at http://www.philly.com/philly/columnists/joseph-distefano/. Bloomberg posts his items at NH BLG_PHILLYDEAL.

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