High-priced pensions raising eyebrows and ire - abc27 WHTM

High-priced pensions raising eyebrows and ire

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Former Penn State vice president Gary Schultz awaits trial for perjury, but critics say his perfectly legal pension is also a crime.

After nearly 40 years in State College, the university bureaucrat got a lump sum retirement payout of $421,847. His yearly pension is $401,132, according to a Right to Know request filed by abc27 News with the State Employees Retirement System.

"It's very frustrating," said state Representative Glen Grell (R-Cumberland County). "I think the benefit is too rich, certainly when compared to private sector."

Grell has worked to reduce pension benefits for new and future teachers and state workers for a simple reason: "We can't afford it," he said.

Grell estimates there are nearly $40 billion in unfunded, looming pension costs and taxpayers will be on the hook. Governor Tom Corbett called pensions a "Pac-Man" gobbling up budget dollars at an alarming rate.

Guys like Frank Oliver don't help. The retired Philadelphia lawmaker left office in 2010 after 37 years. He got a lump sum payout of $416,000. He now gets a $235,686 a year pension, according to Right to Know requests filed with SERS by Rock the Capital.

"A lot of these guys were in the cavities, if not the bowels of the legislature for decades and can walk away with this kind of money," Eric Epstein of Rock the Capital said. "Most people don't even know who Frank Oliver is, you know, and he's making an incredibly large sum of money and it's all legal."

But taxpayers wonder how a rank-and-file lawmaker who made roughly $80,000 at the end of his career received nearly three times that in retirement. One word: multiplier.

In the case of Frank Oliver and a handful of others, they were lawmakers prior to 1974 so their multiplier is 7.5. For most current employees, that multiplier has been reduced and is now three or two. But in Oliver's case, you multiply his 37 years of service by 7.5 and you get 277.5 percent. He gets 277.5 percent of an average of his three highest salaried years.

That no longer happens thanks to a 2010 bill sponsored by Grell. New hires can no longer get more than 100 percent of their salary. So if the average of their 12 highest earning quarters is $80,000, they can't get a pension of more than $80,000. You're saying that's common sense.

"Yeah," Grell concedes, "but it wasn't law. Now it is."

Critics say it's not enough, that more must be done.

"You just have to shake your head. Maybe we should have a cap on pensions," said Tim Potts of Democracy Rising Pa. "The idea of a pension is to help you live comfortably in retirement, not to help you live like a king in retirement."

Potts adds that Schultz and Oliver are exceptions to the rule. Most state workers and teachers have paid into their retirements their entire career and most won't get more than $30,000 a year when they call it quits.

In layman's terms, lump sums come from an employees contribution plus interest. The pension payouts come from investments, employer contributions and taxpayers.

If convicted of perjury, Schultz would forfeit his pension.

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