Governor Tom Corbett has made it no secret that pension reform tops his legislative to-do list in 2013. But he’s still not discussing the details of any possible solutions.
For months, Corbett has been referring to rising pension costs as a Pac-Man poised to eat the state budget. But he says he’s still not ready to divulge what reform might look like. And to those prodding him to offer solutions for the state’s pension problem, Corbett said: slow down.
"Whoa, whoa, whoa, whoa, whoa! There is no silver bullet and every one of you knows that, don’t you," Corbett said. "This is going to be hard and it’s going to take a lot of work. And it’s going to be difficult. But if we don’t do it now fifteen years from now, budgets are going to go entirely to pensions."
State lawmakers have proposed switching current state employees who volunteer and all new employees to a 401-K-style pension plan, a defined contribution program that's tied to investments and is more common in the private sector.
Corbett isn’t hinting at how a pension reform plan may deal with new and current state workers, but he says one thing is clear.
"We’re not taking away – particularly our retirees, that have been long-term employees – we’re not looking to take their pensions away, OK? They’ve been in service to the state long periods of time. They have earned that."
Current state employees have defined benefit plans which are not affected by the ups and downs of investment markets.
Pension plans for state and public school employees are underfunded this year by $40 billion even as the commonwealth placed $1.6 billion into the pension fund. In four years, the state is scheduled to put $4.3 billion toward the fund.
Corbett said only that he’s in talks with the legislature, and will play this hand close to the vest well into next year.