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On Feb. 5, a Philadelphia Inquirer editorial called on the state to reduce the multiplier used to calculate school employee's pensions. AFTPA President Ted Kirsch responded in a letter to the editor and told state affiliates that the AFT would watch carefully for any legislation in Harrisburg that would have an impact on retired school employees' pensions. You can read the Inquirer editorial by clicking on the link under Additional Resources or pasting it into your browser: http://www.philly.com/inquirer/opinion/39129952.html

Protect PA Pension Funds and Retirees

Despite the gloom-and-doom forecast in the Inquirer’s editorial (Pa. Pensions, Feb. 5) the Pennsylvania School Employees Retirement System is solvent, well capitalized and doesn’t need to slash the pensions of retired school employees.

PSERS is like Social Security, which relies on payroll contributions by employees and employers. In exchange for raising the multiplier used to calculate pensions, legislators increased employee contribution rates to 7.5 percent of the income of most employees in 2001.

School districts and the state, on the other hand, have been required to contribute at a much lower rate (1.09 percent in 2002-03 to less than 5 percent today). So, if PSERS trustees need to triple school district contributions now, it’s because previous legislators chose to defer liability and keep employer rates low.

Retirees haven’t received a cost of living increase in six years. Even without the stock market’s recent decline, PSERS would need a hefty increase in employer contributions now.

Since the late 1990s, AFT Pennsylvania, which represents 38,000 teachers, school support staff and state employees, has urged the legislature to set a minimum employer contribution rate of at least 7 percent to provide stable funding and ensure a decent standard of living to retired public employees.

Instead, lawmakers chose to rely on large but unstable Wall Street profits. Had the Legislature established a higher minimum contribution rate in 2001, state pension funds would probably be in better shape today.

Raising employers’ minimum contribution is the most responsible way to maintain the integrity of the pension system.

Additional Resources