Washington, D.C. – After working for decades, Pennsylvania’s teachers and firefighters, police officers and nurses, and courtroom officials should look forward to enjoying a secure middle class retirement. Retirement security, though, has already eroded in the private sector because some employers have walked away from a shared obligation to fund a secure retirement. Today, half of Pennsylvania’s private sector employees receive retirement savings through their employers. And now, in the public sector, calls have been made to follow private sector trends and to replace the pension plans that public sector workers have been counting on with substantially weaker retirement plans. Such a move by the state would deny these public servants the middle class retirement for which they have been planning.
A new report released today by the Center for American Progress and the Keystone Research Center in Harrisburg details the steps lawmakers in Pennsylvania can take to strengthen retirement security for Pennsylvanians.
“People who worked hard all their lives, did all the right things, should expect a decent middle class standard of living,” said Christian Weller, co-author of the report and senior economist at the Center for American Progress. “To get there, though, means that we all have to pull on the same strings: the government, employers, and employees. Increasingly, employers — especially in the private sector — are trying to avoid doing their fair share. State governments as employers should honor the promises made to employees and fund their pension plans. At the same time, state governments can do more to help people in the private sector save for retirement.”
Instead of engaging in this race to the bottom alongside the private sector, state policy makers should be working with the private sector to bolster its citizens’ pension plans. Pennsylvania’s policymakers should step up to the plate and offer retirement income security to public and private sector workers by:
Shoring up public sector employees’ traditional defined benefit (DB) pensions, which provide retirees with a guaranteed amount of money each year based on years of service, retiree’s final annual earnings, and the age when the worker first receives the pension.
Making more widely available private sector 401(k)-style defined contribution (DC) plans, which pay out upon retirement based on how much employers and workers contribute to a retirement fund that is invested in stocks and bonds.
Achieving these two progressive objectives is necessary to ensure Pennsylvania’s current and future retirees a comfortable middle-class retirement. These objectives are not just fair and responsible things for which to strive, they are also both affordable and critical to Pennsylvania’s future economic growth.
Pennsylvania’s policymakers must represent the interests of its hard-working citizens. They should not lower Pennsylvanians’ chances of a secure middle class retirement, but rather strengthen retirement security for public-and private-sector employees alike. The state government has an obligation to do so, not just as a matter of fairness, but also to ensure the state has the human resource management tools necessary to attract and retain a skilled workforce with the increased savings needed to invest in a growing economy.
Click here to read the entire report: Rewarding Hard Work: Give Pennsylvania Families a Shot at Middle Class Retirement Benefits.