Oped: State pension reform needed now
Evidently, too many legislators don't understand that we must legally stop now, as best we can, the Pennsylvania Defined Benefit Pension cost bleeding. Legislators should end all current defined benefit plans on Dec. 31, 2017 with a buyout option to retire in 2017 under the present calculation. Current pensioners will not be cut. A hybrid plan the legislators are working on will not stop enough pension-cost bleeding. All our property taxes (school, county, municipal) will, under the hybrid plan, continue to rise at an unsustainable rate unless proper action is taken now. More property taxpayers will be driven from their homes by a hybrid plan.
If you agree, please contact your state senator and representative. Tell them you support a defined contribution plan for present and future participants, with no change to retired pensioners. On Jan. 1, 2018 everyone should be on a defined contribution plan the General Assembly should pass immediately so savings can be included in the 2018 budget. Present participants who did not take this year's buyout option will get upon retirement what they earned through Dec. 31, 2017 on the old defined benefit plan, plus what they earned after paying a new actuarial higher contribution starting Jan. 1, 2018.
Additionally, they will receive upon retirement what they earned on the new defined contribution plan, assuming they paid their required contribution. If, after Dec. 31, 2017, a participant does not want to pay the new actuarial higher defined benefit contribution, the participant can opt out. All new participants will receive only what they earned under the new defined contribution plan.
Gov. Tom Wolf should sign off on this as soon as it passes the General Assembly.
Two laws should be passed immediately so savings can be included in the 2018 budget. The first law, effective Jan. 1, 2018, increases the defined benefit contribution for present participants actuarially using a realistic 5.5 percent rate of appreciation – not an unrealistic 7.5 percent with unused sick and vacation pay – and the highest salary left out of the retirement calculation. The average of last five years should be used, with availability at age 65.
The Second Law is the new defined contribution law.
The General Assembly should stop kicking the can down the road, refusing to make the tough decisions that the unions oppose, and do what is best for the taxpayers. The present law payout is far too generous when compared to private industry payouts. Yet the private industry pensioners are helping to pay the bill along with private industry taxpayers. Ironically, the private industry pensioners and working taxpayers are paying for these obscene defined benefit pension payments that are creating an elite class of retirees.
— Warren C Bulette is a member of the York County Taxpayers Council and Spring Garden Township resident.