The Philadelphia Inquirer has an editorial today raising many of the same concerns about Governor Tom Corbett's pension proposal as we have at the Keystone Research Center.
The Governor's plan calls for new school and state employees, beginning in 2015, to enroll in a 401(k)-like retirement plan, closing out the state's current defined benefit pension plan. It also proposes to cut current employees' future pension benefits, among other changes. The Keystone Research Center has more on the added costs of the Governor's plan at its pensions issue page.
The Inquirer editorial observes that the Governor's pension plan does not address the current pension issue and will end up costing taxpayers more:
In the guise of a solution, Gov. Corbett's pension reform plan would make the problem worse. It would weaken employee retirement funds, eventually cost taxpayers $179 million more a year, and add $5 billion to unfunded pension liabilities by 2019, and even more afterward.
Those aren't the only reasons the legislature should reject the governor's plan. It also imperils the state's finances, and its proposed cut to current employees' benefits would not survive a legal challenge.
The state caused the pension problem by increasing employee benefits during the boom years while reducing the government's contributions to the pension funds. (State and school employees, it must be noted, never stopped contributing an average of 7 percent of their paychecks to the funds.) Now Corbett wants to balance the state budget by reducing the government's contributions for the next five years, which is the same reckless policy that deflated the funds in the first place.