Over the past few years, the legislature and administration have been concerned about the large obligation that the two pension funds obligated to by the state are way underfunded. In the PSERS (teachers) system, it is underfunded to the tune of about 50 billion dollars. That means that if everyone retired now, there would not be enough dough to pay them off.

Lots of legislators have put forth plans that would essentially change the retirement of those in the system right now, as well as those who would be coming into the system in the future. The hint is that these avaricious people have taken advantage of the generous taxpayers who have taken money out of their own budgets to pay the taxes to fund the system. How can we punish these scoundrels?

We could take away the present system of paying their retirement by going to some sort of 401k payout (and we know how that will work from the 2008 major recession). We can also screw the new people coming in by going to something like a defined benefit plan (of which no one knows what that means). It would also mean less of a  payout.

How did these horrible people screw the public? The answer is- they didn’t. They really didn’t. They had NADA to do with it. The stories about how the teachers and state workers worked their magic to increase their payouts are a bunch of caca de toro. Those who were responsible for the mess are those who make the laws and decided to underfund the system and enrich their own retirement payouts.

It started in 1998-99, when the employee’s contribution percentage was lower than the employers (state and local school district) rate. I had started my career in PA when everyone paid the same percent. That went on for years. Somehow, that started not to work. The state and local school districts began to contribute more sometime in the early 1980’s. The tide completely changed in 1998-99 when the combined contribution of the state and local school districts descended to a lower rate than the employees.

That scene stayed the same for twelve years. In the early 1990’s there was a laws passed that gave employees additional years beyond those that they had accumulated. Then in 2005, the legislature increased the employees multiplier from 2.0 to 2.5  t AND increased their own multiplier to 3.0. That also included the judges. That was later changed back again. However with that action and with the diminution of the stock market investments we wound up in our current situation.

What’s a multiplier- if you take your three highest years of salary and multiply it my .02 (now) and then by your number of years worked, you get your total retirement. You must have 35 years in to get a full retirement in (the state system is 25 years), or age 65. You can see how that would work. Check it out for yourself. In 2010 the actuaries kind of changed the number of years needed to completely fund the system.

The blame is still being placed on the workers. Even with a change to current and future employees, it will not diminish the 50 or so billion that is needed to pay off the current workers. Blame the victim; it’s always a good stratagem.



  1. and don’t forget the employees that contributed were never late or negligent on their payments or their share. There are hundreds of pension plans in PA, most municipal plans are in good shape; it’s the big ones that were drastically underfunded and underwater. As for the 401K, I know my 401K became a 201.5K pretty fast. It’s maybe up in the 300’s now but getting there a lot slower than it went down.

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