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Pa. lawmakers can't keep playing games with coming pension crisis

The public pension crisis is being talked about in Pennsylvania and around the country. Some states are actually doing something — and Pennsylvania should take note.

Of course, in Pennsylvania, the pension crisis was worsened by state lawmakers' voting themselves a 50 percent pension boost in 2001, and quickly giving public teachers union and other state workers a 25 percent boost after they complained.

At the time of the 2001 pension grab, agreed to by then-Gov. Tom Ridge, the dot.com bubble had not yet burst and the two big state pension funds were in surplus, meaning they had assets valued at more than their liabilities. That quickly changed when the stock market tumbled not long after the greedy pension move in Harrisburg.

The first thing that should be done is to reverse the pension hikes passed in 2001 without public discussion or support.

In New Jersey, Gov. Chris Christie is leading a brave battle to bring government costs, including pensions, under control. Christie is refusing to put more money into the sagging pension funds without reforms and cuts to generous benefits.

New Jersey state assemblyman Declan O'Scanlon Jr. introduced a bill to roll back a 9 percent public employee pension boost given to workers in 2001.

Pennsylvania should follow O'Scanlon's lead in rolling back the 2001 pension grab.

Next, Pennsylvania should put a cap on public pensions.

The best argument for a cap is news that retiring state Sen. Robert Mellow, D-Lackawanna, is eligible for an annual pension of $313,000 — nearly triple his current salary of $110,250.

How Mellow managed such a feat is complicated, but the basic fact is that no public employee should retire with an annual pension of more than $300,000, or triple his salary.

In Illinois, where a pension crisis also looms, the state capped pensions at $106,800 a year and also raised the retirement age to 67. Both are common-sense moves that Pennsylvania should adopt.

Several other states, including Arizona, New York and Missouri, will make people work more years to earn a pension.

In California, a deal with public employee unions will see the state's contribution to pensions reduced and the public workers required to contribute 10 percent of their pay — double the current contribution for some.

Some states also are trying to prevent people from gaming the system by taking on extra jobs or increasing overtime pay in the final years of work, to boost future pension benefits. Such manipulation should be illegal. Pensions should be based on one salary only, and not be impacted by overtime pay.

Writing in the Pittsburgh Business Times, commentator Jon Delano noted the unfairness to taxpayers who have suffered pension losses, being forced to pay more for generous public pensions. He also says the underfunding problems would not be so critical if public pensions had not been allowed to become so generous.

Delano joins other commentators in arguing that public pensions must shift from defined-benefit programs to defined-contribution plans, like 401(k) programs, which are the most common retirement plan for private-sector workers. Such a conversion would help, but it would not solve the crisis in Pennsylvania or most other states.

He also suggests common-sense moves already described here, such as increasing public employees' contributions and raising the retirement age.

Delano notes, "While nobody likes to see more taken out of their paycheck, the system is unsustainable."

In Pennsylvania, the latest attempt at pension reform makes minor changes, kicks the problem down the road a few years, and also adds nearly $30 billion in costs over the long term. Typical.

There might be hope, however. State Rep. Tim Krieger, R-Delmont, introduced a bill last week that would shift all new and current state lawmakers to a 401(k) plan. Since state lawmakers are loathe to reduce their own pay or benefits, the bill offers taxpayers little hope.

Even if it were to pass, it would only be a start — all government employees should be on 401(k) plans that let them enjoy the fruits of a strong stock market as well as the pain of a weak market, like everybody else.

Voters should press state lawmakers for serious, common-sense and unavoidable pension reform. Now.

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