Rendell’s Pension “Fix” Merely Delays Costs

With his 2010-11 budget, Gov. Rendell got around to addressing the looming pension crisis. However, his proposed “fix” – re-amortizing the liabilities over 30 years, then phasing in the increase in employer (re: taxpayer contributions) – merely delays the inevitable, pushing cost onto future generations.

In fact, while Rendell’s proposal would lower costs vs. current law for a few years, it would result in substantially higher taxpayer costs in the years to follow (see chart from PSERS below; both scenarios assume 8% annual investment return).