Thursday, July 10, 2014
Inquirer Daily News

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

As profits trail payouts

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

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.

  

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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