Pennsylvania’s two main government worker pension systems, the Public School Employee Retirement System (PSERS) and the State Employee Retirement System (SERS), together have more tha than $47 billion in unfunded liabilities, due to past policy decisions and investment returns that failed to meet projections. This shortfall will require dramatic increases in taxpayer contributions.
Pennsylvania needs pension reform that provides state workers with a sustainable retirement system that’s fair to new workers, existing employees and taxpayers. Switching to a defined contribution (DC) plan for new government employees would remove politics from pensions and provide adequate retirement benefits that are affordable, predictable, and current.
- DC plans are affordable for taxpayers, with no risk from investment losses and no debt transferred onto future generations.
- Properly designed DC plans provide adequate retirement plans that workers own and can take with them to other jobs, leave to their children, and withdraw when they want.
- DC plans are predictable for government budgeting—costs are fixed by law and not dependent on actuarial assumptions, investment returns, or paying off past debts.
For more information on the benefits of defined contribution plans, check out Pensions: Past, Present and Future.