Gov. Corbett's pension plan won't solve the funding problem

Share with others:

Print Email Read Later

Again Gov. Tom Corbett is pushing his idea for pension reform. Before buying this “pig in a bag” I suggest everyone look at the pension record.

This problem occurred because pensions were underfunded for many years during boom times and the recession cut into plans that were often sold as secure investments. The original pension plans required a contribution by the employee and a match or almost match by the employer.

Now the governor wants to go to a hybrid plan for new employees, with defined benefit plans funded up to salaries of $50,000 and then 401(k)-style plans. This would require a match from employee and employer. If the employer match wasn’t being done before, what makes anyone think it will be done now, especially when (not if) the match of funds becomes inconvenient? Which sets the stage for another round of pension woes and instability.

A 401(k) is no picnic since you need to fund it to a hefty amount to take advantage of good investment opportunities. To keep the individual plan going, you will need dedicated savings dropped into it each month with or without a match. And you can lose money in this plan. There are pitfalls aplenty with these new ideas. Get ready for Economics 101 everyone.



Join the conversation:

Commenting policy | How to report abuse
To report inappropriate comments, abuse and/or repeat offenders, please send an email to and include a link to the article and a copy of the comment. Your report will be reviewed in a timely manner. Thank you.
Commenting policy | How to report abuse


Create a free PG account.
Already have an account?