Report: Pensions Pump Up Local Economies in PA
HARRISBURG, Pa. - As Gov. Tom Corbett proposes a plan to reduce pension payments to state workers, a new report says pension income for individuals means billions of dollars to regional and local economies in Pennsylvania.
The study comes from the Keystone Research Center. Its executive director, Steve Herzenberg, said it shows that retired teachers and first responders use their pension payments to shop at stores, eat at restaurants and receive care at assisted-living centers.
"Pennsylvania's two main statewide retirement plans paid out $7.6 billion to Pennsylvania residents in 2012," he said, "and supported over $13 billion in economic activity."
Corbett wants to transition new state workers into 401(k) and other individual retirement accounts. If the bill for the state and school employees' pension systems' came due, the governor said, it's a $45 billion unfunded liability that would cost every household in the state thousands of dollars.
Herzenberg countered that any plan that undermines retirement security isn't the kind of pension reform that most Pennsylvanians are looking for. He said the KRC study shows that the Corbett plan would hit many communities in the state hard, especially those in rural areas.
"Because pension benefits are particularly important where other sources of income have flat-lined in recent decades," he said. "So, (in) just over half of Pennsylvania counties, most of them rural, pension benefits account for more than 2 percent of income."
Herzenberg acknowledged that shoring up pension plans in Pennsylvania won't be an overnight job, but said he believes it's worth the investment, and that a good plan is one of the costs of doing business.
"We need to grow the economy, stop giving away money we can't afford for corporate tax cuts that don't actually strengthen the economy, and make the pension contributions that are needed to have good employees," he said. "Those are the basic steps we need to take."
The full report is online at keystoneresearch.org.