Without higher contributions from workers and taxpayers, Pennsylvania’s public sector pension plans may not be able to pay for their promises.
And if investment returns fail to live up to expectations, the two pension funds could run dry before the end of the next decade.
Those are the startling conclusions drawn by a pair of researchers at the Mercatus Center, an economic think tank based at George Mason University, which examined Pennsylvania’s Public School Employees Retirement System and the State Employees Retirement System.
The center says PSERS has a 31 percent chance of making it to 2030 with sufficient funding to pay for all the retirement benefits promised to current and former workers, while SERS has only a 16 percent chance of making it that long.
Taxpayers and public school employees should expect some good news later this year when one of state’s major public pension systems releases its investment returns for the most recent fiscal year.
The state Public School Employees Retirement System, or PSERS, earned nearly 15 percent during the fiscal year that ended on June 30. A press release on the organization’s website Monday revealed the latest findings.
Exceeding the annual investment earnings assumption of 7.5 percent helps to ease the burden of the unfunded liability that must be made up in the future by some combination of future investment returns, contributions from workers and tax dollars.
HARRISBURG – Gov. Tom Corbett will “very likely” propose cutting future pension benefits for current school employees and state workers in the state budget plan he will present to lawmakers next week, his chief budget adviser said Monday.
Budget Secretary Charles Zogby, all but confirming a cost-cutting approach that the administration first floated last fall despite questions about its legality, said decisive steps must be taken to rein in taxpayers’ fast-growing share of pension costs.
“We’ve got to pay for our obligations and we need to look at a rebalancing of our pension obligations … if we’re going to meet our needs without inflicting deep cuts elsewhere in the budget,” he said at a Pennsylvania Press Club luncheon.