Just 18 lawmakers in thestate have opted for the 401(k)-style plan they mandated foreveryone else, with the other 198—43 of whom are freshmenlegislators who signed up for pension benefits—clinging to theold-style pension. (Photo: Shutterstock)

|

It may be sauce for the goose, but Pennsylvania lawmakersobviously don't think it's sauce for the gander as well.

|

After succeeding in pushing a transformation for stategovernment and school employees' pension plans into more401(k)-style plans in 2017, the state's lawmakers also included aprovision that gave them “until the end of March of this year todecide whether to switch from the traditional guaranteed pensionplan into one of the new plan options.”

|

So says a report from PennLive that points out that just18 lawmakers in the state have opted for the 401(k)-style plan theymandated for everyone else, with the other 198—43 of whom arefreshmen legislators who signed up for pension benefits—clinging tothe old-style pension.

|

The last laugh may be on them, however, considering the state ofmost public pension plans in the country. A Bloomberg report foretells a pension fund “crisis” in2023, which is not very far off at all.

|

Drawing on information from the Pew Charitable Trusts, it highlights the factthat the gap between pension fund assets and liabilities is growingand could reach critical mass in 2023 because of low market returnsand the potential for an extended period of bad returns that couldrun those funds out of money as existing liabilities areredeemed.

|

Pensions are a hot button issue. The PennLive report cites BarryShutt, a retired state employee turned political activist, who itsays “spends days at the Capitol sitting beside his pensionliability clock that tracks the rising debt of the public pensionsystems by the second. The clock was climbing toward $70.4 billionlast week.”

|

According to Shutt, “They [the legislators] talk the talk butthey don't walk the walk….What they want everyone else to do, theydon't want to do themselves. That's typical of this place. We makethe rules for everyone else that we don't follow.”

|

While lawmakers pushed other public workers into 401(k)-styleplans, they opted to keep the conventional pension for themselves,according to the report, but since the state has failed to keep upwith contributions to the pension plan those lawmakers too may getcaught up in the modern trap of having insufficient retirementmoney on hand when the time comes.

|

Lawmakers are seeing an unfortunate result of emotions that runhigh around pensions. In Illinois, reports NPR, legislators and public employeeshave been on the receiving end of death threats for being the onesin line to collect state pensions.

|

An anonymous letter mailed to “several legislators and at leastone public radio station” in the state, headed “DEAD PEOPLE CAN'TCOLLECT FAT STATE PENSIONS,” goes on to threaten the lives ofanyone in line to receive state-funded pensions—even if they chooseto leave the state upon retirement.  “Are you sure thatrecent accidental deaths on the highways or train platforms reallywere accidents—or the conscious decisions of people with nothingleft to lose to “take one with me'?” the writer asks.

|

Of course, if the Bloomberg report is right, the Illinoisthreat-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.

|

READ MORE:

|

Pension plan sponsors warming up to annuitybuyouts: MetLife

|

5 worst, best states for pensionfunding

|

4 retirement plan sponsors with pensionwoes

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.