Critics: Corbett pension reforms would cost $50B+
If a lack of time wasn't enough, the pension reform plan backed by Gov. Tom Corbett faces continued criticism from Democrats and the liberal-leaning Keystone Research Center.
The KRC on Tuesday released additional briefing papers on the governor's proposal, which would convert the state's public sector pension systems to defined-contribution plans for new hires and make changes to future benefits for current employees.
The Republican plan also would make short-term collar adjustments on the annual increase in the employer contribution limit.
Actuarial projections released by the Public School Employees' Retirement System and the State Employees' Retirement System show cost increases as a result of the governor's plan that total $50.8 billion, according to the KRC. State taxpayers will pay more than $40 billion more, the organization said.
"These independent actuarial studies reinforce the point many have made since the governor's plans were first announced," said Stephen Herzenberg, economist and executive director of the KRC. "We cannot afford to dig a deeper pension hole, raise costs for taxpayers and undermine retirement security. Advanced in the name of fiscal restraint, the governor's proposal would leave taxpayers picking up a $42 billion tab."
Most of the losses result from lower investment returns as the current defined-benefit pension plans wind down, the collar adjustments and the cost of retirement plans for future employees, according to the KRC.
The studies estimate the proposed restructuring would produce $28.7 billion in savings, most of it from reductions in future pension benefits earned by current employees. If these savings survived a state constitutional challenge, which could occur if the plan is advanced, the net costs of the governor's plan would be $22.1 billion, according to the KRC.
If the governor's pension cuts for current employees are not enacted or are ruled unconstitutional, his plan would cost $42 billion.
"It is more clear to me than ever that the governor has not proposed a pension reform plan," state Treasurer Rob McCord said. "He has proposed a scheme to allow him to close a hole in this year's budget at both far higher costs for taxpayers and far lower benefits for retired workers down the road."
Democrats continue to argue that the state should let reforms made in 2010 under Act 120 run their course.
In March, the administration said its plan could save $11.6 billion over the next 30 years.