Union Supports 401(k)s for Philadelphia Teachers

Thousands of school teachers in Philadelphia will see their retirement plans switched to 401(k)-type plans next year—and the union representing those teachers is okay with the reform.


I should have noted this is happening in Catholic schools.

The Archdiocese of Philadelphia is transitioning employees (including parochial school teachers and church employees) into a 401(k) plan going forward, which will match employee contributions with a 4.5 percent employer contribution. The reform will allow the Archdiocese to pay off its unfunded liability over 30 years (with no mention of the transition cost myth that has been used to undermine public pension reform).

The union representing some of the teachers affected thinks employees should be okay with the move, as Harold Brubaker at the Philadelphia Inquirer reports:

Rita C. Schwartz, president of the labor union that represents 650 teachers in archdiocesan high schools, said the move was not surprising, given the financial restructuring underway at the archdiocese in the last year.

“My concern is that our teachers don’t panic,” Schwartz said. “The pension’s not gone. It’s there.”

Why did the private sector union take a different tact from the PSEA’s misinformation campaign slogans like “Your pension is under attack” and “Keep the promise”?

Simply put, private unions recognize that employers need to have sustainable retirement plans or they may go out of business—costing union members their jobs. In government, the assumption is taxpayers can just keep paying more (though in reality, higher pension costs result in teacher layoffs too).

Lawmakers should take a lesson from the private sector in adopting meaningful pension reform.