Remove Politics from Pensions
A letter to the editor I sent to the Pittsburgh Post-Gazette takes on some of the myths and facts of pension reform:
Nina Esposito-Visgitis, president of the Pittsburgh Federation of Teachers, wrote that Gov. Tom Corbett is taking aim at the retirement benefits of public school employees ("Let Pennsylvania Pension Reforms Work," Feb. 21 Perspectives). Teachers have a right to be fired up about their pensions, but Ms. Visgitis offers misleading information to fire them up at the wrong targets.
Current and retired teachers would see no changes in the benefits they've already earned, though Ms. Visgitis falsely claims the benefits of current employees might be cut in half. Additional benefits that current workers could gain in future years would be lowered by at most 20 percent for those with higher-level benefits.
Despite Ms. Visgitis's assertion, the current system is not sustainable. In fact, the pension systems will require dramatically higher taxpayer payments to keep going -- upwards of $1,000 per year in additional taxpayer payments per household.
The truly sustainable answer is placing teachers in a 401(k)-type plan, as the governor suggests. This won't cost more but would create an affordable and predictable system -- one that is not subject to political manipulation.
Pensions were hurt by the economic downturns of the last decade and by underfunding of the plans. But Ms. Visgitis forgot to mention the huge pension increase in 2001, which created $10 billion in pension debt. That increase, along with the "vacation" that lawmakers enacted by delaying pension payments, illustrates the political manipulation inherent in the system.
Only by switching to a 401(k)-style plan can we remove politics from pensions and protect retirement benefits for future generations.
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