Just 18 lawmakers in the state have opted for the 401(k)-style plan they mandated for everyone else, with the other 198—43 of whom are freshmen legislators who signed up for pension benefits—clinging to the old-style pension. (Photo: Shutterstock)
It may be sauce for the goose, but Pennsylvania lawmakers obviously don't think it's sauce for the gander as well.
After succeeding in pushing a transformation for state government and school employees' pension plans into more 401(k)-style plans in 2017, the state's lawmakers also included a provision that gave them “until the end of March of this year to decide whether to switch from the traditional guaranteed pension plan into one of the new plan options.”
So says a report from PennLive that points out that just 18 lawmakers in the state have opted for the 401(k)-style plan they mandated for everyone else, with the other 198—43 of whom are freshmen legislators who signed up for pension benefits—clinging to the old-style pension.
The last laugh may be on them, however, considering the state of most public pension plans in the country. A Bloomberg report foretells a pension fund “crisis” in 2023, which is not very far off at all.
Drawing on information from the Pew Charitable Trusts, it highlights the fact that the gap between pension fund assets and liabilities is growing and could reach critical mass in 2023 because of low market returns and the potential for an extended period of bad returns that could run those funds out of money as existing liabilities are redeemed.
Pensions are a hot button issue. The PennLive report cites Barry Shutt, a retired state employee turned political activist, who it says “spends days at the Capitol sitting beside his pension liability clock that tracks the rising debt of the public pension systems by the second. The clock was climbing toward $70.4 billion last week.”
According to Shutt, “They [the legislators] talk the talk but they don't walk the walk….What they want everyone else to do, they don't want to do themselves. That's typical of this place. We make the rules for everyone else that we don't follow.”
While lawmakers pushed other public workers into 401(k)-style plans, they opted to keep the conventional pension for themselves, according to the report, but since the state has failed to keep up with contributions to the pension plan those lawmakers too may get caught up in the modern trap of having insufficient retirement money on hand when the time comes.
Lawmakers are seeing an unfortunate result of emotions that run high around pensions. In Illinois, reports NPR, legislators and public employees have been on the receiving end of death threats for being the ones in line to collect state pensions.
An anonymous letter mailed to “several legislators and at least one public radio station” in the state, headed “DEAD PEOPLE CAN'T COLLECT FAT STATE PENSIONS,” goes on to threaten the lives of anyone in line to receive state-funded pensions—even if they choose to leave the state upon retirement. “Are you sure that recent accidental deaths on the highways or train platforms really were accidents—or the conscious decisions of people with nothing left to lose to “take one with me'?” the writer asks.
Of course, if the Bloomberg report is right, the Illinois threat-writer, along with those on both sides of the pension/401(k) choice, might all be in the soup together in just a few years.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
