Pa.panel digs into pension proposals

    A joint panel of state House lawmakers is reviewing proposals to reform Pennsylvania’s pension system for state and public school workers.

    It’s expected to be a protracted debate.

    Lawmakers have tried to wrap their heads around the complicated mess of problems plaguing the state’s pension system, such as the bad economy and shortsighted underfunding.

    They’re considering proposals to change state retirement plans from one that sets a certain benefit, to a another 401(k)-style plan that locks in the employee’s and employer’s contribution.

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    Andy Biggs, a scholar with the conservative American Enterprise Institute, says he favors defined contribution plans because they don’t hang the funding of a pension on an optimistic view of the economy or a political decision.

    “These are interactions, so the economic and financial factors, and the funding rules, and human nature,” he said. “And human nature is, if you can take a vacation from funding, you will do that.”

    Testimony from a liberal-leaning research group warns switching to defined contribution plans could pinch the pocketbooks of public employees.

    “You’ve taken the one place in our economy where food service workers and bus drivers and school secretaries can have a secure retirement — you’ve denied them that opportunity and you’ve transferred the money to financial services firms,” says Steve Herzenberg, director of the Keystone Research Center.

    It’s a concern voiced by one Democratic lawmaker, who says the discussion of pension reform has been marked by a lack of empathy.

    “Their retirement security, their level of income in retirement. And if people have no money to spend, whether it’s in retirement or as employees, that affects the economy because there are no goods and services being purchased,” said state Rep. Phyllis Mundy of Luzerne County.

    But the joint committee’s Republican chairman says his empathy is for the taxpayers.

    “Those are the individuals, the majority of which elected me to be here, that I’m looking out for their interest, for the taxpayer’s interest,” says Rep. Daryl Metcalfe of Butler County. “They’re being asked to pay too much to receive far too little.”

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