State Pension System Going Deeper into the Red
Eleanor Chute of the Post-Gazette notes the approval of the pension contribution rates for Pennsylvania school employees (split between school districts and the state).
She also notes that the rate approved is lower than was expected (indeed, lower than the normal cost of the pension plan, much less the cost of paying off our liability), that the lower rate will increase long term costs, and that the PSERS board approved the rate – mandated by legislators – under protest.
The agency already was predicting a dramatic rise in employer contributions in order to boost the pension fund, peaking at 33.6 percent in 2014-15 and remaining above 20 percent through 2031-32. With the reduced increase, the rate spike is expected to be bigger, 33.83 percent in 2014-15 while still remaining above 20 percent through 2031-32. …
The resolution, approved in a 12-2 vote, said the board’s decision to approve the smaller increase was “made under protest” and that the Legislature’s action “sets a dangerous precedent to deliberately use the fiscal code to continue the under-funding of PSERS regardless of the actual funding needs of PSERS.”
It stated the board is “deeply troubled” because the directive “undermines” the board’s fiduciary responsibility and increases an already unfunded liability.