This is the second in a series of blog posts debunking the myths surrounding Pennsylvania’s pension crisis.
Pennsylvania’s two main pension systems, the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS), are dramatically underfunded. Together these plans have more than $47 billion in unfunded liabilities, which works out to around $8,400 per Pennsylvania household.
Myth: Act 120 of 2010 solved the growing debt problem for teacher and state worker pensions.
Fact: The Pennsylvania State Education Association claims Act 120 fixed our pension crisis by lowering upcoming pension costs. This claim ignores a dramatically underfunded system. We’re already more than $47 billion in debt, which will require higher taxes to pay off.
Projections regarding Act 120 were based on an unrealistic 8 percent return on investment. These assumptions have already been lowered. Without consistent, unrealistically high investment returns, the current pension system is beyond hope of becoming self-sustaining.
For more information, visit our myths and facts on the pension crisis.