“Self Ciervo” And His PA Pension Polemic

The following appeared on the Op-Ed page of the Bucks County Courier Times today from Rob Ciervo, running against Steve Santarsiero for the PA-31 State House seat (from here)…

The Courier Times editorial staff is right to hold all incumbents and candidates for state representative and state Senate to a pledge to put forth serious ideas about the current public pension crisis. As a candidate for the state House in the Makefields, Yardley and Newtown areas, this issue will be one of great importance to my goal of reforming Harrisburg to save taxpayers’ money.

The problem? Public employees receive a defined benefit pension plan, guaranteed by taxpayers for life. If the money is not in the retirement fund then taxes have to be raised to pay out the benefits each year. In 2012, what now costs $1 billion will cost more than $3 billion and that is not a one time payment, these payments will continue for decades.

I have a question; is Ciervo talking about underfunded plans? If so, the following should be noted from here (a pensions subcommittee report issued last April)…

The subcommittee recommends that Pennsylvania follow Missouri’s example by enacting legislation that prohibits municipalities from authorizing pension benefit increases unless their pension plan would be at least 80 percent funded after taking the increased liability into account. Such a provision would prevent municipalities still catching up on prior underfunding of plans from approving further benefits that they could not easily afford.

Also (from the report)…

With regard to defined contribution versus defined benefit plans, subcommittee members did not reach consensus but recognized the need to balance labor’s concerns for pension security with municipalities’ concerns for controlling costs.

In addition to basic fairness in honoring the state’s defined benefit pension obligation here (with those pensioners being almost entirely individuals nearing retirement), there’s another reason why the obligations should be honored, and that is because, as noted here, it is illegal not to do so…

“The state employees and the teachers have been putting their fair share in every year and we have not. Shame on us that it hasn’t occurred, we should have been doing this all along,” said Rep Mario Scavello (R-Monroe).

“During the good years, instead of paying our normal costs, we ended up putting it on a credit card, and now that credit card has come due, so if I change it to another system and another credit card, it will probably add even more to what it will cost in the long run. If we do not get enough money to meet our normal costs, we can’t invest it, and then we have even less and the amount the taxpayers owe will be even greater,” said Melva Volger, chairman of the (Public School Employees Retirement System) PSERS board.

Also, get a load of this from Ciervo…

The private sector realized decades ago that defined benefit plans are completely unsustainable in an age where with the best medical system in the world, residents are living much longer than any actuary would have expected.

As Wikipedia tells us here, the U.S. ranks 38th in worldwide life expectancy (in your face, Uruguay, Macedonia and Latvia!).

And here’s more “fun” from Ciervo…

The first pension reform needed is to simply eliminate the option for a taxpayer-funded pension for any new state employee, including public school educators. All new hires should be provided the option to participate in a defined contribution plan, whereby employees contribute at least 5 percent of their salary, pre-tax, toward their retirement fund and the state matches that contribution at the minimum of 5 percent as well.

Good luck trying to attract good teachers with a crappy pension benefit (of course, this ties in nicely to what Ciervo and his teabagger friend Simon Campbell want to do, and that is to force a Pennsbury teachers strike to try and make Steve look bad, among other goals). And if the taxpayers aren’t going to contribute the “match” here, where will it come from?

And finally…

You can be certain that the Philadelphia and Harrisburg union bosses will vehemently oppose this plan. They will continue to fund the campaigns of candidates who would block these needed reforms and offer little assistance to the taxpayer in return.

Actually, as noted here, Steve Santarsiero voted in favor of a bill to amend payment of unfunded actuarial liability to PA pension plans (not that Ciervo would actually acknowledge that, of course).

I will grudgingly admit that Ciervo is right to point out that the day must come when public employees move to the 403(b) defined contribution plans he advocates. But as noted here, our pension issue in PA emerged due to market conditions first and foremost (referencing the words of Rep. Scavello above), and the PSERS, at which Ciervo is taking aim, “is well-managed and as sound as any public pension plan in the country.” Let’s all take a deep breath and keep that in mind before we try to take a sledgehammer to it, OK?

And to contact Steve, click here.

Update 2/16/10: Here is another welcome dose of reality on this subject.

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One Response to “Self Ciervo” And His PA Pension Polemic

  1. […] for a reminder about “Self” Ciervo, I give you this… Chapman, a described life-long conservative, entered the race to promote and enact job growing […]

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