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5/08/2015 9:45 am  #1


41 BILLION Short Fall for Public Pensions - PA

I post this as PA has at least a 41 billion short fall for public pensions?
And it continues to grow!
 
 "Nov. 26, 2012  (Bloomberg) -- Pennsylvania’s two public pensions face a combined shortfall of $41 billion, and their costs will consume 62 percent of fiscal 2014 revenue growth, according to a report from the state budget office."
 
The effect on our school system will be devastating. This is going to cause the extremely high school property tax to increase at unsustainable pace!
 


E-Mail from Senator Wagner:
Good Morning –
 Contained in this email blast are two articles from the Patriot News. 

The first article was published this past Wednesday by reporter Jan Murphy.

It is titled "Set for Life - Browse the database to see who is receiving a six-figure annual pension" - Click on the link below to view the article -

http://www.pennlive.com/politics/index.ssf/2015/05/set_for_life_browse_the_databa.html#comments

The second article was published yesterday by reporter Charles Thompson.

The article is titled - "How PA state workers and teachers calculate their pensions" - Click on the link below to view the full article -

http://www.pennlive.com/midstate/index.ssf/2015/05/how_to_figure_a_state_employee.html

This first article exposes the six-figure annual pensions of many retired Pennsylvania state government and school district employees.

Number one on the list is a retired Pennsylvania State University employee who is receiving $39,799.23 per month for a total yearly annuity of $477,591.

Number two on the list is another retired Pennsylvania State University employee who is receiving $36,989.98 per month for a total yearly annuity of $443,880.

These numbers do not reflect the health benefits that retired state employees are also receiving.

Please take note that of the top 25 people on the list, 13 are Penn State University retirees.

I have reported in the past that I serve on the Senate Appropriations committee and our committee is in the process of reviewing the governor's budget.

I am scratching my head wondering why last year the State of Pennsylvania contributed approximately $230 million dollars from the general fund to Penn State University and this year Governor Wolf's budget is proposing a $50 million dollar increase this year to Penn State for a total of approximately $280 million from the general fund to Penn State.

During Appropriations hearings last month I specifically asked the President of Penn State University for their financial statements to allow our committee to understand how much cash Penn State currently has in its various bank accounts and endowments.

Here is the head scratching thought - why is the state giving Penn State any money when it appears the money is going to subsidize breathtaking lifetime pensions when in fact the money should be going towards the education of their students?

I am not trying to single out Penn State University -  I am just stating the facts.

I have mentioned in previous email blasts that retirement and health benefits state employees receive are completely out of line with the private sector and they are virtually unsustainable.

For anyone wondering why Pennsylvania taxes are so high, these articles are crystal clear examples.

The second article explains how pension benefits are calculated stating that, "So as the plan exists now, a PennDOT foreman with 35 years of service could retire with pension income equal to 87.5 percent of their average pay for the last three years on the job."

Excuse me - did I read that right?

In the last 3 years of a PennDOT foreman's employment it is not unreasonable that this person could spike their gross income to $100,000 annually or more for the last 3 years of their employment so that an average of the 3 years could very well be $100,000 or more.

At $100,000 per year average for the last 3 years this person would retire with $87,500 per year to start for the rest of their life, plus lifetime healthcare benefits.

So a foreman could tell his wife - "Hey honey, I'm going to spend the next 3 years working as much overtime as I can so I can drive  my annual compensation up as high as possible so I'll get a gold-plated pension when I retire - I'll be back in 3 years!"

Reading articles like this combined with what I have learned since taking office makes me sick to my stomach.

This is the exact reason why I have introduced legislation such as my Taxpayer Fairness in Compensation Act.

These articles are more examples of how working class families are the ones who continue to get exploited in Pennsylvania.

Below is a graph from PennLive of the Top 40 highest pensions, but to view and search the full database of the thousands of retired state government and school district employees receiving over $100,000 per year in pension benefits, click on the link below:

http://www.pennlive.com/politics/index.ssf/2015/05/set_for_life_browse_the_databa.html#comments
Thank You,

Scott Wagner
 

Last edited by Common Sense (5/08/2015 9:46 am)


 “We hold these truths to be self-evident,”  former vice president Biden said during a campaign event in Texas on Monday. "All men and women created by — you know, you know, the thing.”

 
 

5/08/2015 11:15 am  #2


Re: 41 BILLION Short Fall for Public Pensions - PA

So . . . What do you propose to remedy this situation Common?
You always post articles, links, and blogs with a certain point of view, but rarely comment unless someone responds with an opposing point of view to a posted article, and, even then, your response does not clearly define your position, but attacks the respondent's position.

So, please tell me what is your position and suggested plan of action to remedy this $41 million shortfall.

I believe that public pensions should be moved to defined contribution plans rather than defined benefit plans. If something drastic isn't done, the taxpayer will be designated to make up all or a portion of the shortfall.

What is your position?

Have you written to your elected officials to make them aware of your personal position?

Last edited by Rongone (5/08/2015 11:16 am)

 

5/08/2015 11:27 am  #3


Re: 41 BILLION Short Fall for Public Pensions - PA

The "bad news" is that MOST states are in the same dilema. Latest figures I ran across were from 2012 and PA was right in the middle of the states ranking of most underfunded. 

While many private companies have shored up their reserves for defined benefit pensions, state have been kicking the can down the road on this one. 

We need to move away from defined benefit plans and put the decisions on investments back squarely where it belongs as well as make the state IMMEDIATELY fund their portion. 

http://www.zerohedge.com/news/2014-09-26/public-pension-funds-face-2-trillion-shortfall-moodys-warns

 

Last edited by tennyson (5/08/2015 11:28 am)


"Do not confuse motion and progress, A rocking horse keeps moving but does not make any progress"
 
 

5/08/2015 11:29 am  #4


Re: 41 BILLION Short Fall for Public Pensions - PA

One immediate thing that I would like to see done is scrap the guaranteed pension entirely for all public employees going forward, from entry level employees to state senators and the governor.  It's simply not sustainable, and they can fund their own 401Ks like almost all of us have to if we want to retire.

As for the $41 billion short fall, I have no idea.  I imagine that it eventually might involve massive tax increases that will end some politicians' careers.  I hope I'm wrong.

Last edited by The Man (5/08/2015 11:32 am)

 

5/08/2015 11:36 am  #5


Re: 41 BILLION Short Fall for Public Pensions - PA

"While many private companies have shored up their reserves for defined benefit pensions, state have been kicking the can down the road on this one. ".    Tennyson


One thing private companies have done to remove costly retirement plan liabilities from their books relating to pension plans is to work to transfer annuity retirement packages from the company to the individual. They offer to payout a lump sum to the owner rather than continue to carry it on their books. The employee/retiree is given the option of taking the value of the annuity in cash or transfer the amount into an investment of their choice in their personal retirement account.

 

5/08/2015 1:21 pm  #6


Re: 41 BILLION Short Fall for Public Pensions - PA

This is from Wagner's weekly e-mail to constituents concerning proposed pension reform:


Comprehensive Pension Reform Plan to be Introduced

Senate Republicans will introduce legislation next week to reform Pennsylvania’s costly state pension systems, which are causing increases in school taxes and cuts to school programs and now threaten to increase state taxes.

Senate Bill 1 restructures the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System -- in order to make them viable in the long term.

The features of Senate Bill 1 include:

All new state and public school employees will be enrolled in a mandatory, 401k-type Defined Contribution Plan similar to those used by private sector workers.
Members of the General Assembly, upon election or reelection, will be enrolled in the Defined Contribution Plan. The plan provision will be consistent with state and public school employees.
Current employees must choose between increasing their pension contribution or reducing their future benefits.
A Public Pension Management and Asset Investment Review Commission made up of investment professionals and retirement advisors will be established to make recommendations to the General Assembly and the Governor. Among their duties will be to evaluate the performance of current investment strategies and procedures of both state retirement systems regarding rates of return and associated fees paid for fund management.
Senate Bill 1 provides choices to current and former employees to create a pension plan that they tailor to suit their needs. Most importantly, it gets the taxpayers out of the pension risk business.



I basically agree with the features outlined in this plan except for the proposed Commission. I'm unclear as to the responsibility and function of the commission. Much less do I think taxpayers should pay for the commissions operation and sage investment advice. If the commission is paid for out of fees from employees participating in the public employee retirement plans, then I'd be OK with it.

 

5/08/2015 1:43 pm  #7


Re: 41 BILLION Short Fall for Public Pensions - PA

Rongone wrote:

So . . . What do you propose to remedy this situation Common?
You always post articles, links, and blogs with a certain point of view, but rarely comment unless someone responds with an opposing point of view to a posted article, and, even then, your response does not clearly define your position, but attacks the respondent's position.

So, please tell me what is your position and suggested plan of action to remedy this $41 million shortfall.

I think that it would improve the experience here on the board if you would listen to Rongone here.

Having real dialogue would be great. Just a thought.

Last edited by Goose (5/08/2015 1:53 pm)


We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
 

5/08/2015 2:10 pm  #8


Re: 41 BILLION Short Fall for Public Pensions - PA

Rongone wrote:

This is from Wagner's weekly e-mail to constituents concerning proposed pension reform:


Comprehensive Pension Reform Plan to be Introduced

Senate Republicans will introduce legislation next week to reform Pennsylvania’s costly state pension systems, which are causing increases in school taxes and cuts to school programs and now threaten to increase state taxes.

Senate Bill 1 restructures the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System -- in order to make them viable in the long term.

The features of Senate Bill 1 include:

All new state and public school employees will be enrolled in a mandatory, 401k-type Defined Contribution Plan similar to those used by private sector workers.
Members of the General Assembly, upon election or reelection, will be enrolled in the Defined Contribution Plan. The plan provision will be consistent with state and public school employees.
Current employees must choose between increasing their pension contribution or reducing their future benefits.
A Public Pension Management and Asset Investment Review Commission made up of investment professionals and retirement advisors will be established to make recommendations to the General Assembly and the Governor. Among their duties will be to evaluate the performance of current investment strategies and procedures of both state retirement systems regarding rates of return and associated fees paid for fund management.
Senate Bill 1 provides choices to current and former employees to create a pension plan that they tailor to suit their needs. Most importantly, it gets the taxpayers out of the pension risk business.



I basically agree with the features outlined in this plan except for the proposed Commission. I'm unclear as to the responsibility and function of the commission. Much less do I think taxpayers should pay for the commissions operation and sage investment advice. If the commission is paid for out of fees from employees participating in the public employee retirement plans, then I'd be OK with it.

 
I'm almost on board with this.  My disagreements are:

1) ALL public employees, including elected officials should not have guaranteed pensions at all going forward.

2) The 401k should not be mandatory.  It's their money, and they should be allowed to do with it as they wish.

 

5/08/2015 2:19 pm  #9


Re: 41 BILLION Short Fall for Public Pensions - PA

A couple things. First, I am totally onboard with eliminating defined benefit plans, as they are a relic of another time and are not sustainable.

I think it is in our society's best interest to do all we can to help people have retiremnt plans and to not be solely dependent on SS in old age.
Also, you have to compete with private employers for the works. So you should offer what they offer.


We live in a time in which decent and otherwise sensible people are surrendering too easily to the hectoring of morons or extremists. 
 

5/08/2015 2:27 pm  #10


Re: 41 BILLION Short Fall for Public Pensions - PA

Goose wrote:

I think it is in our society's best interest to do all we can to help people have retiremnt plans and to not be solely dependent on SS in old age.

I think it should be up to our government's/employer's to strongly encourage retirement savings, as most of them seem to do, but making it mandatory is overstepping their boundary, IMO.

Goose wrote:

Also, you have to compete with private employers for the works. So you should offer what they offer.

 
99% of the private sector doesn't offer defined pensions, or even a 401k match any longer, so I don't think the government would have a problem competing with the private sector if they got rid of guaranteed, defined pensions.

 

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