Pension Costs Just a Guess

HARRISBURG – Today, the Commonwealth Foundation offered perspective on new reports and upcoming analysis from the Public Employee Retirement Commission (PERC) about pension reform legislation. PERC’s reports note that there is wide disagreement among actuaries about the cost of reform. This is one of the major flaws in the current pension system.

"Taxpayers shouldn’t be subjected to a system where costs are just a guess," said Matthew Brouillette, president & CEO of the Commonwealth Foundation. "In contrast, defined contribution plans like those being discussed in the state House and Senate have predictable costs every year."

The most obvious flaw in projected costs for SERS and PSERS is that they assume a 7.5 percent return on investments and that future lawmakers will retain the current payment schedule. Unfortunately, the $47 billion and growing pension crisis facing the state has occurred precisely because both of these assumptions have been proven false.

Brouillette concluded: "Lawmakers can protect taxpayers by shifting risk and ending the guessing game in pension funding. Putting new employees into a defined contribution plan will get the politics out of pensions and create a system with predictable and affordable costs with no unfunded liability passed on to our children and grandchildren."

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For more information, please contact John Bouder, Communications Officer at 717-671-1901 or [email protected].
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