As I read some of our commonwealth’s many publications, one problem in particular seems to rear its ugly head — our state’s pension obligation. Our state, due to problems of its own making, has a pension funding shortfall that desperately needs to be remedied.
Unfortunately, for Pennsylvania’s citizens, our legislators seem only to be compounding the problem. Two ideas in particular consistently arise. First, cut pensions of current state employees. This is difficult because it may very well be unconstitutional and would be legally challenged. Second, put new state employees in defined contribution plans better known as 401(k)s. This would not only pull more money “out” of paying for today’s pensioners but would more than likely be more expensive to manage.
Neither of these strategies solves the real problem. Our pension fund needs more money — now! A creative approach to do that is to allow state employees to invest more money into our pensions on their own initiative. Why would they do this? Our state’s pension is very well run. Its average return over the past five years is 10 percent. Many people, myself included, would like that kind of return on their money. At the end of the fiscal year, charge these separate accounts a percentage of their return as well as management fees. State employees gain by receiving a nice return on their money with the satisfaction of knowing that they also helped out the state as well. If this strategy works well with state employees, it can then extend to all state residents.
I have tried to push this idea to several legislators, only to be given a variety of excuses. The time has come for our legislators to think outside the box and come up with a real plan to help Pennsylvania’s underfunded pension for the benefit of all of our state’s citizens.
The writer is union president, Penn-Trafford Area Education Association.