Would You Like a Pension?

From the BCCT.

Before we break out the tar and pitchforks, let's remember it's not the teachers who set up this system, but our elected hoi-polloi in Harrisburg.

Public pensions more lucrative than private
By: GARY WECKSELBLATT
Bucks County Courier Times

In a 2006 report for the Commonwealth Foundation, a government watchdog group, senior fellow Richard C. Dreyfus wrote that Pennsylvania public pension funds, which cover legislators, judges, public school employees and other state employees, are more generous than plans in other states and are far more generous than a representative group of major private employers in Pennsylvania.

In Nov. 2008, the Employee Benefit Research Institute, whose goal is to "enhance the development of sound employee benefit programs and sound public policy through objective research and education" reported median pay for public pensions nationally in 2007 was $23,721, compared to $12,599 for those drawing a retirement check in the private sector.

The Congressional Research Service said government workers are twice as likely to get a pension as those who work for private companies and the typical benefit "is far more generous."

But supporters of those pensions say they serve a purpose.

"You don't hear people say I'm leaving the private sector to make more money," said Stephen Herzenberg, an economist with Keystone Research.

Herzenberg, who researched "The State of Working Pennsylvania 2008" with Mark Price, concluded "the top 1 percent of Pennsylvania earners captured a stunning 79 percent of all growth in personal income between 2001 and 2005."

Another find showed "the average income of the bottom 90 percent of Pennsylvania families fell by 4 percent between 2001 and 2005."

"Good, secure pensions are actually in part compensation for having lower wages," Herzenberg said. "In Bucks and Montgomery counties, you have the pick of the crop of teachers who could make more money with private companies but they choose to teach because it's a very important thing to do."

Herzenberg said the decline in private pensions is the problem, not the generosity of public retirement plans.

"This Wall Street collapse makes it plain that we can't rely on 401(k)s for pension security. So the right policy in response is not to strip everyone back to 401(k)s," he said. "It's how do we get secure pensions for more private sector workers as well as school custodians."

Wyphe Keever concurs. Keever, assistant communications director for the Public School Employees Retirement System, said "the public sector is often pitted in what I call a race to the bottom. At the bottom is retirement insecurity for all, where no one has enough money to retire. That's not good for the private sector, that's not good for the public sector."

Jeff Clay, PSERS' executive director, calls it "class warfare."

"People say I don't have it so you shouldn't either. These are difficult times. We should be coming together looking for solutions instead of scapegoating."

But that divide between those who have government benefits and those who don't appears to be accelerating.

"The local and state government pension crisis will dwarf just about any fiscal issue because these systems are so generous," said Pete Sepp, vice-president for policy and communications with the National Taxpayer Union. "The problem we'll have with Social Security 20 years from now is happening right now with pensions.

"The challenge is to try and stop the bleeding by reforming the system for new hirers. That will buy us a little time at least."

Matt Brouillette, president and CEO of the Commonwealth Foundation, said his group did an analysis of 44 major corporations in Pennsylvania and all are phasing out defined benefit pensions.

"They're too unaffordable and too unpredictable," he said. "Like most things in Harrisburg, it requires a major controversial crisis to get anything done, and we're certainly on the verge of that. It could very well mean bringing pitchforks to the Capitol steps."