Pension Fund

[stormrider]

Perhaps the school board should consider an early retirement offer to teachers with 30 or more years service and save some money for the upcoming pension crisis?

Just an idea for new school board members to consider mentioning in an executive session. Mr. Lago said he was open to ideas on this topic.

Stormy

[papakazzi]

How many years do you have stormy?
I am working on 34 and only 15 more to go....LOL

[stormrider]

papa,

I've been working since I was 13 years old, and most of my life I have worked at least two jobs, as I do now.

Stormy

[papakazzi]

So what's your point? I started working at 5 with a paper route with my brothers and I have a few years on you. Good to see that you can still tap dance around the answers.

Teachers can retire now with 30 years of service....what more incentive do you want??

[stormrider]

papa,

Walking along while your brothers worked doesn't count. I did that too.

Teachers who retire before 35 years take a penalty. An incentive would free up any where from $20K to $40K per teacher. That money could be used to make up for all of the years that districts were taking a vacation from contributing into the pension fund.

So much for having an open mind.

Talk about tap dancing.

Stormy

[cab]

Stormy,

That would save money, but it would result in PSSA scores going down. Less experienced teachers don't do the same job that more experienced teachers do. With the focus on those test scores I can't see the district wanting to lose the best teachers it has.

[papakazzi]

So who imposes the penalty, PSERS or the district ? I can't see the district being able to control this option but I could be wrong, I'm still green. I am a huge advocate of giving people the ability to retire early, it would open up the job market for the new kids on the block. Instead they keep pushing the eligible age higher and higher. When I heard of Obama's healthcare plan possibly opening medicare participation starting at age 55 I got a little glimmer in my eyes....then they glazed over and I came back to the real world.

FYI: I did have my own paper route when I was 5. Granted, it was only 6 customers on my street but they were MY responsibility. By time I was 13 (the age you started working) all my brothers had quit and I had the entire walking route of 75 customers. At the same time I was working with my Uncle who had a garage door installation business and me and a friend were taking care of grass cutting at St. Barbara cemetary. We even dug a few graves in the summer time.

Ready to retire Papa

[stormrider]

papa,

You dug graves? I used to have relatives in that business.

cab,

Now convince the edge of town on your opinion.

Stormy

[papakazzi]

PSBA Pension Reform Bill to be Introduced Today;
Please Ask Your Legislator to Co-Sponsor

An announcement on the introduction of a bill calling for a major change to the Public School Employees Retirement System and backed by PSBA will be introduced this afternoon (Dec. 16) at 2:00 p.m.at the State Capitol.

Sponsored by Sen. Gene Yaw (R-Lycoming) and Rep. Glen Grell (R-Cumberland), the bill would transform PSERS from a 100% defined benefit system to a hybrid defined benefit/defined contribution system.

The proposal, HB 2135 (no Senate bill number at this writing), is part of the recommendation made by PSBA's Pension Study Committee in 2007. The recommendation was unanimously accepted by the PSBA Board of Directors and the PSBA Platform Committee and was overwhelmingly reaffirmed this past fall by voting delegates from around the state at the meeting of the PSBA Policy Council.

The legislation being proposed represents the committee's long term solution to the pension issue. As described previously, PSBA is calling for the creation of a hybrid pension system for school employees, one that combines the advantages of a defined benefit and a defined contribution system.

The bill would create a new class of employees, T-E, comprised of individuals who join the system after June 30, 2010. These employees will enjoy the benefits of a defined benefit system, albeit at a lower benefit level, but also have the opportunity to make contributions and control the types of investments in which their contributions are placed through a newly-created defined contribution program. At the time of their retirement, these individuals would reap the benefits earned by both the defined benefit investments and their defined contribution benefits.

The defined benefit features that would be included in the bill for class T-E employees are 1) an employee contribution rate of 3.25% of salary, down from the current 7.5%; 2) a multiplier of 1%, down from the current 2.5%; and 3) a vesting period of 10 years, up from the current 5-year period.

The new defined contribution system calls for the creation of an Individual Annuity Savings Account for all eligible members of the system. Each eligible member would contribute a minimum of 3% of their salary to the account, along with a mandatory match of 2% of compensation by the employer. Employees could contribute more subject to IRS limitations.

The PSERS Board of Directors would have the power to make any necessary rules and regulations for the administration and management of the Individual Annuity Savings Plan and have the power to enter into written agreements with one or more financial institutions or other organizations relating to the plan's administration and investment of funds. These rules and regulation include, but are not limited to the following:
The types of investments that are permitted
How and when individuals can transfer contributions between investments
Procedures for deducting amounts to be deferred from members' compensation
Standards or criteria for the selection for the selection of financial institutions or other organizations that may be qualified as managers of funds deferred under the plan or to provide other services relating to the administration and management of the plan
Standards and criteria for disclosing and providing options to eligible individuals regarding investments of amounts deferred under the plan
Standards and criteria for disclosing the anticipated and actual income attributable to amounts invested, property rights and all fees, costs and charges to be made against amounts deferred to cover the costs and expenses of administering and managing the plan or funds
Procedures, standards and criteria for the making of withdrawals from the plan upon separation from employment or death or in other circumstances consistent with the purpose of the plan.
The bill also modifies the 4% minimum employer contribution floor, so that it would remain in effect in years when the funded ratio of the plan is 100% or more. However this minimum rate would be offset by the amount of funds contributed as part of the defined contribution part of the system.

Also, the bill provides that increases in school district contributions to the pension system would be capped at the Act 1 index. Should the increase in the school district share of the employer contribution rate exceed the current year Act 1 index, the state would pick up the difference between the new employer contribution rate and the index.

The hybrid pension bill would save the system, including school districts and taxpayers, money over the long run because it would create a system that is less expensive to operate, both in terms of the contributions needed and in terms of the benefits paid out to retirees. Projections from Buck consultants, the actuaries used by PSERS, show that the employer contribution under the hybrid plan would be less than under the current plan over the next 25 years. Moreover, the current PSERS system benefit represents approximately 72% of final salary, while the hybrid plan benefit would represent anywhere from 53% -63% of salary depending on investment returns and the amount of salary employees choose to contribute to the defined contribution part of the plan.

[cab]

One amendment. Every state employee, including future legislators, should be covered by that bill not just school district employees.

Papa, the unions are going to fight that bill tooth and nail. If the numbers were changed to 7.5% from the employee, a match by the school district with a floor of 4% and a maximum of 7.5% depending on what the districts are paying PSERS for all of their existing employees, and 5 years until you're vested the same way 401k plans work they'd probably go along with it. With those rules some current teachers would switch to that plan from the current one as long as they had input on the investments.