Here is a letter I sent to the West Chester Daily Local, responding to a piece by state Sen. Dominic Pileggi, which argues for passing a flawed pension bill now, under Gov. Rendell and a lame-duck House, before Tom Corbett and a Republican-controlled House take office:
Sen. Pileggi, in a recent guest column, writes that pending legislation will “avoid crisis” in state pensions. But all this legislation does is delay the crisis, deferring costs to our kids and grandkids.
The bill he supports includes some reductions in benefits for new employees and risk sharing, but it delays required contributions into pension funds for state and school employees. While this may reduce spending for a few years, it also requires even higher payments in the future— higher than the “spike” Sen. Pileggi wants to avoid. It’s like not paying your mortgage for a few years and calling it “savings.”
The first step to pension reform is moving to a defined-contribution plan, like a 401(k)— as most of the private sector has already done. Sen. Pileggi does not ignore this, but writes, “there is simply not sufficient support in the legislature for such a change.”
Yet legislation currently sits in the Pennsylvania Senate, co-sponsored by 18 state senators, that would enact real pension reform. Sen. Pat Browne noted this bill would pass the Senate− if Sen. Pileggi would allow a vote on it. And that was even before Tuesday’s sweeping election, which Sen. Pileggi seems to have missed.
Furthermore, moving to a 401(k)-plan is supported by Governor-elect Tom Corbett. Most importantly, 54% of voters support moving to a defined-contribution plan, including a majority of Republicans, Democrats, and Independents. Pension reform is too important to rush through a lame-duck legislature and Governor, whose fiscal policies voters have just rejected.
For more info, visit CommonwealthFoundation.org/pensions.