As Budget Hangs in Balance, Consequences of Pension Inaction Emerge

Commonwealth Foundation
Contact: 717-671-1901

Pension Reform Critical to Shield PA’s Public Workers from Cut

Detroit Retirees Face Major Losses This Week Due to Inaction on Reform

Good morning,

While state lawmakers approved a state budget without enacting pension reform, Detroit’s failure to address the same issue illustrates the painful consequences of inaction—a proposed 4.5 percent cut in benefits for retirees.

“Detroit’s bankruptcy, which was spurred by public pension debt, gives Pennsylvania a window into its own possible future if government union leaders continue to get their way and block meaningful pension reform,” commented Nathan Benefield, vice president of policy analysis for the Commonwealth Foundation. “The city’s bankruptcy proceedings have made it clear that pension debt can threaten not only taxpayers, but even the benefits of current workers and retirees who thought their pensions were ‘guaranteed’.”

According to an Associated Press report, former Detroit city workers are stuck with a lose-lose decision because city leaders failed to act on a predictable pension crisis. This Friday, these retirees will vote on accepting a 4.5 percent reduction in pension benefits with no cost-of-living adjustments going forward, a cut backed by state pension boards.

A “no” vote could put cuts in the hands of the bankruptcy court where benefit reductions could be even more drastic.

Benefield continued:

“An alternative to Detroit’s pension failure is Oklahoma, which passed significant pension reform this spring. Oklahoma’ new law putting future state workers into defined contribution plans will stop throwing more workers into a sinking ship and avoid the pension debt which sank Detroit. The choice for Pennsylvania could not be clearer.”

For more information on Pennsylvania’s pension crisis, see Commonwealth Foundation’s infographic, “Triple Threat Pension Debt.”

Nathan Benefield is available for comment on the consequences of inaction on public pension reform. Please use the below contact information to schedule an interview.


Cindy Hamill
Dir. of Strategic Communications
Commonwealth Foundation
Harrisburg | King of Prussia
Office: 7170671-1901
[email protected]