Penn Gov. Confirms: He will try to Reduce Current Employee Pension Accrual Rate.


” . . . it appears the governor will push the General Assembly to enact pension reform that impacts workers who are currently enrolled in the system.”

“Corbett said in a recent press conference that he believes it is legally possible to limit the reduction to future benefits that employees have yet to accrue.  For example, he said the ‘multiplier’ – a percentage applied to an employee’s years of service and final average salary to produce his or her retirement benefit – could be reset at a lower rate for the latter part of the employee’s career.  ‘You can cut the multiplier for folks going forward even if they (are) vested … because they still have the benefit of that period that they had the multiplier,’ Corbett said. ‘Legally, can you do that? I believe you can.'”

Governor Corbett’s proposal is a public pension reform advocated by pension scholar Professor Amy Monahan of the University of Minnesota School of Law in her paper “Public Pension Plan Reform: The Legal Framework.”

Link to Monahan paper:…

(My comment: Although the Monahan proposal may not pass court muster, it is certainly a “less drastic” pension reform proposal than Colorado’s breach of the public pension contracts of current retirees in SB 10-001.  The 17 lobbyists [many representing Colorado public sector unions] who pushed SB 10-001 through the legislative process for Colorado PERA hoped to avoid proposals that significantly affected current public employees.  The lobbyists hoped to accomplish this by breaking PERA contracts with PERA retirees, and pushing 90 percent of the costs of the pension reforms onto retiree shoulders.  [Yes, these pensioners are the retired union “brothers and sisters” of Colorado’s public sector unions.]  The PERA retirees just happened to be unrepresented at the Colorado Legislature, unorganized, and paying no dues to the public sector unions.  See how the world works?  

Colorado’s public sector unions may now have the distinction of being the only public sector unions in the history of the U.S. labor movement who have so egregiously betrayed their retired union members.  I can find no comparable treachery.  As we have seen, the sponsors of SB 10-001 and PERA officials have boasted in the press many times of the fact that they targeted PERA retirees with 90 percent of the costs of the 2010 pension reforms.)

Politicians Have Created the Public Pension Mess.

“State Rep. Todd Stephens, R-151, said he’ll look at any proposal for a potential fix, but would tread slowly with any plan that cuts benefits to current employees.  ‘It’s very important to remember it’s the politicians of both parties who created this mess, not the employees,’ he said.

(A quotation from the 2010 Colorado pension reform debate: “[Senator Penry] said several members of his caucus signed on as co-sponsors to show their support for reform.  ‘Republicans and Democrats created this mess and Republicans and Democrats are offering a real solution on this,'” Penry said.)

Link to SB 10-001 co-prime sponsor Senator Penry’s comment:…

“Using the example of 55-year-old workers who have done his financial planning ‘based on a promise made to them,’ Stephens said it would be ‘unfair to pull the rug out from them at this stage of the game.'”

“An attorney, Stephens said he’s read court opinions that ‘really frown on changing benefits.  It would be a big mistake for us to do that and have the courts throw it out three years later.  That would put us in a bigger hole.'”

(A quotation from the Illinois pension reform debate: ” . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

Gino L. DiVito, Tabet DiVito & Rothstein LLC, Chicago, ILL)

“State Rep. Madeleine Dean, D-153, said it would be ‘wrong’ and ‘a mistake’ to penalize employees when it was the government that didn’t fully fund the system because of strong stock market returns a decade ago.”

(My comment: As we have seen recently, the Colorado General Assembly has not been paying its public pension bills this decade.  The General Assembly has typically paid only 50 to 70 percent of its PERA pension “annual required contributions [ARC],” determined by PERA’s actuaries in the last decade for the PERA State and School divisions.  Colorado PERA officials testify every year before the Legislature’s Joint Budget Committee, Audit Committee and Joint Finance Committees.  My guess is that if one listened to tapes of the 30 meetings held with these legislative committees in the last decade, one would never encounter a statement from a PERA official reminding the General Assembly of its obligations to pay the ARC, or imploring the General Assembly to meet these contractual pension obligations.  In my opinion, this failure to implore the Legislature to meet its contractual pension obligations constitutes breach of fiduciary duty.)

“Pennsylvania State Education Association President Mike Crossey criticized the Keystone Pension Report for making a ‘scapegoat of working people who have contributed to their pensions.  It was (Pennsylvania public) EMPLOYERS that paid nearly nothing into the pension systems for a decade.'”

“Crossey blamed Corbett for ‘a conscious policy decision to provide over $800 million in corporate tax breaks, including the capital stock and franchise tax and bonus depreciation credit, which cost the state $760 million – more than the projected pension debt owed” in fiscal year 2013-14.”

(My comment: As we have documented, the Colorado General Assembly [and Colorado voters in 1992] have turned the state of Colorado into a tax haven.  We have breached the state’s public contracts in spite of the fact that Colorado is the 15th wealthiest state in the nation.  We are better than this.)

Link to full article:…

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