The Faces of 90.5 WESA
Thu October 11, 2012
Rep. Treasurer Candidate Outlines Pension Solution
Republican candidate for State Treasurer Diana Irey Vaughan presented Thursday a three-step solution to take on what she said are dangerous problems in the state’s two pension plans. The Washington County Commissioner criticized current State Treasurer Rob McCord’s handling of the state’s pension system over the last three and a half years while presenting her own plan to shore up the Service Employees Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS).
Vaughn said both systems were funded at 120 percent in 1999. Until ther investments were hurt when the stock market tumbled.
“Right now, SERS is 75 percent funded and PSERS is 69 percent funded,” said Vaughan “And Moody’s has downgraded Pennsylvania’s bond rating because of the fiscal health of the commonwealth.”
Vaughan said she would first work to reduce the state’s debt. Citing Moody’s Analytics decision to downgrade Pennsylvania’s bond rating as reason to examine if the state can afford its borrowing.
Vaughan then promised to simplify in what the pensions are investing.
She said that in 2011 46 percent of the assets in the pension system were invested in “alternative investments.” She said the percentage was too high and too risky for any pension system and the fees for managing so many of those high-risk investments are very expensive.
She said at least 77 percent of the $1.35 million the pensions paid were given to those managing risky investments.
Vaughan then promised to responsibly fund the pensions and promised to pay more attention to them than the current Treasurer.
“This is the most important thing that the Treasurer needs to show leadership for,” said Vaughan. “The people on the legislature and they’re coming up with a plan, but they don’t sit on both of those boards. That’s why there’s a distinction between what they’re doing and having the State Treasurer weigh in on that issue.”
Vaughan, who has served as a Washington County Commissioner, said the plan comes in part from managing the county’s $100 million pension system. She said, unlike the state, her county knew enough not to take money out of the fund when it went above the 100 percent funded mark.
Vaughan also attacked current Treasurer Rob McCord’s leadership on the job. She said he missed 50 percent of PSERS meetings during his first three years in office, and the system’s investment in alternative investments was due to the Treasurer’s background as a venture capitalist. She said his “risky Wall-Street venture capital portfolio mindset has been carried over into the Treasury.”