Tuesday, 30 May 2006

Group: pensions flawed at state, local levels

by Damon Boughamer
Public Radio Capitol News, serving Pennsylvania

Harrisburg, Penna. (PRCN, 26 May 2006) – Potential pension shortfalls have been a concern at the state level for a while, but this past week brought reports of local problems, specifically in Pittsburgh and York.

One group thinks both problems – state and local – are serious.

The conservative Commonwealth Foundation is calling on policymakers to address fund gaps now, before they get bigger.

Pittsburgh’s shortfall alone is already $469 million, and the city’s pension fund, as it stands, could meet only 44-percent of its obligations.

The foundation’s Matt Brouillette says it’s hard to say whether local or state difficulties are more concerning.

“It’s a lot easier to quantify it at the state level and to see how large and enormous it is, but when you stack these things upon the locality, your school district, it is difficult to get your mind around how troubling these systems are,” Brouillette says.

Brouillette says government should accept the same reality that has set in across the private sector: that defined-benefit pensions are outmoded and must be replaced with defined-contribution plans.