Audio Blog: Expectations Exceed Reality with Pa. Pensions
In a recent interview with Stephanie Renee, host of WURD AM’s The Mojo, Nathan Benefield discussed the roots of Pennsylvania’s pension crisis and how to fix it.
Pension debt has stacked up significantly since 2001, when lawmakers retroactively increased pensions for state workers, public school teachers, and even themselves. Nate noted that an increase in pension benefits, coupled with reliance on the not-so-reliable stock market, have led to our $63 billion pension debt.
Additionally, overly optimistic assumptions that our pension investment funds will return 7.5% interest each year haven't borne out. More than a decade of underfunding our pension system has only served to push the burden of skyrocketing pension debt onto future generations.
The Department of Corrections alone owes over $3.3 billion in pension liability, while the Department of Human Services owes over $2.3 billion. The Turnpike Commission, which rounds out the list of PA’s ten agencies with the most pension debt, faces over $300 million in pension liability.
To see the impact of this debt, just look at higher tolls on the turnpike, higher tuition at state universities, and higher prices at our state-run liquor stores.
Nate explained that moving to a defined contribution plan, similar to the private sector’s 401(k) plans, would alleviate some of the pending pension trouble. Not only would it protect the system from the uncertainties of stock market returns, but it would also protect public employees and taxpayers from political influence.
Click here or listen below for the full interview: