PA Senate leaders: End state, teacher pension guarantees
Sunset for SERS and PSERS
PA Senate leaders: End state, teacher pension guarantees
Joseph N. DiStefano
In Pennsylvania, state senate leaders want to stop guaranteeing pensions for future state workers and teachers. Here's why:
The Pennsylvania State Employees' Retirement System and Public School Employees' Retirement System are proud achievements of 20th Century state government.
Like similar plans in other states, SERS and PSERS have enabled hundreds of thousands of hardworking teachers, police officers, prison guards and social workers to retire on up to 70% of their maximum yearly wages, keeping them in their homes and cars and restaurants and off the streets -- while also guaranteeing private-sector-executive-style six-figure annual payments. plus medical benefits, to ex-judges, Penn State sports coaches, assistant school district administrators with extra degrees and four-word titles, double-dipping General Assembly members, and other privileged members of the bipartisan public-employee elite.
Public pensions are like paper currencies: They work well when managed by principled fiscally responsible people, if you can find them, but are vulnerable to political decisions to boost spending, cut income, and leave the program unsustainable for future generations.
Pennsylvania is a prime offender: Under former Gov. Tom Ridge (R), the state in 2001 boosted pensions even as it cut taxpayer support. (Public workers also pay more than 6% of their paychecks into the fund, but it's not enough to pay all the future checks.)
To replace lost state revenues, the plans hired hundreds of expensive private-sector money managers, some of them political donors, to jack up assets.
That hasn't worked. The result is a multibillion-dollar and growing shortfall between what the pension plans have amassed and what they're going to have to pay hundreds of thousands of surprisingly healthy retirees for decades to come; along with rapidly increasing demands on taxpayers that are driving local school taxes up, outraging citizens.
Gov. Ed Rendell (D) very late in his administration was prevailed upon to trim state pension costs by raising the collection age to 65 and doubling the minimum service period to 10 years.
And yet the gap widens, and pensions are forcing state and local tax spending higher. So now the Republicans who run the State Senate, led by Sen. Dominic Pileggi, R-Delco, say they are introducing legislation to kill the guaranteed-pension system, effective for future state and school employees after this year, and replace it with a private-sector-style, 401(k)/403(b)-type program where it's up to amateurs (retirees) to pick stocks and funds and tighten their belts when the market goes south. Though their own pensions and those of current constituents will be safe. More here.
Fernando88: bravo, great post!!
Joe D: amazing how many commenters call this an article, as if this is your column, when this is your BLOG!!!! Thanks for responding, as many of these posters do NOT like and REFUSE to hear any pushback on their prepared statements, the same they throw against the wall each and every day on just about every site that even hints that public sector workers are human and actually work hard, that union workers are human and actually work hard. Of course, as we know bankers and wall street brokers and analysts are really the hard workers!!— chuckw- I don't oppose affordable pension plans for govt workers. The problem is the pols used acct gimmicks, etc that put these plans in insolvency territory.
That said, I do recommend, that pension amts be capped at let's say $45,000 which is the national average annual income. That would have prevented the Joe Paterno situation where a state worker is due $13 Million.— justablogger - When the economy was chugging along nobody had a problem with hardworking middle class workers retiring. Now that the rich has rigged the system and lost, GOP pols in Harrisburg will attempt to pay money out of those at the bottom of the ladder. Don't let them do it. The wealthy need to pay, and those who defrauded Wall Street banks need to pay in pinstripes.— Yodude2
- I don't believe it is sound journalism for a reporter to wrap up his piece by including a web link taking the reader website operated by a GOP politician involved in this policy. If so, where is the link to the other side of the story?— Yodude2
- this will never happen since most of the legislators are republican and are doing better than the public employees. we have a 2.5 % per years of service while they have 3%. i've worked 30 years and put a ton of money in this plan. remember, a lot of you folks laughed at teachers for having low wages. and now you bought the republican package since your life turned out to consist of moving back with your parents and complaining all day and night about teachers, black and hispanics, etc. what you boys need is a life.— joegrink
- I agree - do away with all publicly-funded pensions and retirement benefits. 401K plans work quite well. Live like the rest of us.— DC
- Those who have made the point that public pensions are back loaded salaries are correct. Teachers know going in that they will be paid less money up front so that they can be vested in a pension and reap the reward at retirement.
There was a report on World News Tonight about the way that 401K are being robbed by exorbitant management fees. And some want us to turn to that system instead???
If we had honest managers and the proper contributions to the plan by government, there would be no need for threatening to end the defined benefit.
BTW - I have been retired for over 10 years and have received only one COLA and must help pay for my own health insurance.
There is no free lunch here.— Magistra - D.C. the workers pay for their own pensions by direct contributions and by accepting a lower salary. The state's contribution is only a fraction of the total.
401Ks do not work well if they are subject to overpriced management fees and the whims of the stock market.
Defined benefit plans are best for everyone....but only if they are honestly managed and off limits for politicians.— Magistra - This is what I use to research stock investments. Ps I am up 15% not bad for a garbage man
Stock Symbol __________ Name_______________ Date__________
FUNDAMENTALS
Capitalization_________ Shares Outstanding _________ 2
Price______ Book Value______ X (1.5) ______ S&P Price to Book , His/high________
P.E. His/high_________
P.E. ______ (15) S Book Value / Price ________ > 1
Growth 3/5______ ( fast ) current estimate _________ next est. _______
EPS Growth___________ Revenue growth ___________ Sales growth __________
PE/G __________)_ (1.3) S = 4 (Revenue)_______________
P/S ___________ )_(>3) S = 6
R.O.E.__________>17 R.O.A.__________ > 5 ( 10 ) % R.O. I. __________
R.O.E./P.E._______>.75 Growth + Yield / PE______ > 2 ( 3 )
Profit margin _______ > 5% Gross margin________ Dividend Yield_______ Rate______ yield growth_____
( ttm. )
Free Cash/Share _______(>0) Price/Cash Flow______(6 Consecutive Dividends____ Inventory/Sales __________
IBD overall_________ IBD EPS ________ IBD Fund ________ IBD Smart _________
TECHNICALS
IBD RS ________ Group strength __________ IBD acc/dis__________ Gann Speed Angle _________
200 Avg. _______ 50 Avg. _______ Pivot Point________ Support./ Resist Point________/_________
Money Flow_______ Bollinger Bands____________ Osillators__________ 75,50,25
Williams% ob(20)_os(80)___________ Macd ____________ RSI ob (80)-os(20)__________
Market Edge Rec._____________
NOTES:
(HTML deleted)— garbage man - the republicans like to say drill baby drill....well i say vote republican vote...if people dont see how the republicans are trying to kill everything, maybe this will open their eyes— shelmus226
- We should follow Rhode Island's lead and RE-fund the current pensions to a more reasonable and sustainable rate of payment. Although it breaks the contract, it alleviates the burden on taxpayers and still gives the public workers a pension. It would require a public vote so it will never happen here because as stated in the article, the inmates are running the asylum.— 42Homestead
- the overly generous public pension system is completely unsustainable. it is bankrupting our school districts and communities. reform is long overdue. everyone involved should get a haircut recipients, pols and taxpayers.this whole system is legislative malpractice and a remedy must be available for the besieged taxpayer. your pols better get to work if they want to survive. the public has had enough.— jstash
- The current pension system is unsustainable. Period. It must stop.— alsdkjk
- Most telling part of the article: "(Senate leaders') own pensions... will be safe."— Stand for Something
- yes wisconsin and rhode island are addressing the problem. so can we and the legislature must be part of the reform.— jstash
