PA state pension fund gets real, and that's expensive
Investment target drops to 7.5%, from 8%
PA state pension fund gets real, and that's expensive
Joseph N. DiStefano
The Pennsylvania State Employees' Retirement System has cut its investment-profits target to 7.5%, from its previous 8%, in an admission that the bull markets that boosted pension assets in the 1980s and 1990s aren't likely to come back anytime soon. (This is SERS, not the teachers' PSERS fund, as a previous version of this report wrongly stated. Though PSERS faces similar issues.)
The bad news: A lower target means a bigger projected deficit - to be made up with bigger taxpayer "contributions" from state income and sales taxes. That means the "funded ratio" of future liabilities to investment assets has shrunk from around 69%, to 65%. And the future surcharge on state payroll will rise to 11.5% next year, from zero in the mid-2000s, and up again in future years, until investment markets start zooming up again, or the state changes its pension formulas again.
I have no problem with pensions, but the employees should bear the risk if markets do not perform, not the state. Funding of pensions will consist more and more of the budget in years to come. So get ready for some more tax hikes and service cuts. This state is going down.— flyers2thecup- Theb pension fund is run be an investment guru, Little Nick Maile from Souf Philly. What, me worry?— Wilhelm Von Humboldt
- Excellent news.More taxes needed to pay for state worker pensions means putting off their own retirement. I think the average private sector worker will now be able to retire at age 99 so government workers can retire at 60. Seems about right doesnt it?— tr88
How much of this is for health care? All government workers should be moved to an expanded Medicare program so the states won't go broke with skyrocketing health care liabilities.
