Pension costs take huge chunks out of municipal budgets. Allentown's three pension funds have tanked in the past two years, leaving taxpayers to make up the difference. Northampton County is no different. In his 2010 Budget message, County Exec John Stoffa warns that "[c]ounty-wide retirement related costs (retirement and retiree healthcare) are expected to rise from $13.1 million in 2009 to $19.9 million in 2010, an increase of $6.8 million (52%)." Anyone working for Northampton County gets free medical care for the rest of his life after retiring. Pretty nice perk, eh? Stoffa, aware of how this drives up cost, has asked County Council to consider eliminating the new perk for new hires. He was flatly shot down by the same Council members who now shriek about the proposed 9.3% tax hike. A year ago, when Council member Ron Angle warned colleagues that the retirement fund needed a big cash infusion, he was ignored.
So how do Northampton County Council candidates feel about defined-benefit pensions? Municipal retirees currently receive pensions based on some formula regardless of the economic conditions. The risk is on the government's shoulders. This is unlike a defined-contribution plan, in which that pension is more dependent on the economic conditions and the markets, placing the risk on the employee. Should defined benefits be replaced with defined contributions, which is what increasingly is occurring in the private sector?
Lorraine Pasquali: "Obviously, the County has the taxpayers to answer to so defunding of the pension plans really needs to go along with the county budget and should be directed that way rather than private sector profit margins."
Obviously, Pasquale has no clue what she's talking about, and just tried to sling baloney sandwiches. This will happen when she attends no meetings despite having no job.
Charles Dertinger (see video here): "Just like every other pension fund out there, it's invested ... most of the money is invested ... and our investments, just like everyone else's, has seen shortfalls. And the only difference is that we have a certain period of time to make up those shortfalls unlike other pension funds that can just simply go defunct. ...
"We have a significant fund balance. We have a significant surplus in our rainy day fund. That's where the money has been coming from presently. It's been coming from that rainy day fund."
The rainy day fund again. First, Dertinger is using it to balance the budget. Now, he's using it to contribute to the pension fund. Incidentally, his assertion that the rainy day fund is already being used for the pension fund will be news to the Stoffa administration.
Like his protege, Pasquali, Dertinger has no idea what he is talking about, not even mentioning defined contribution plans. He's only marginally more adept at serving up bullshit burgers.
Bruce Gilbert: (see video here) "In a defined contribution plan, the employee gets to decide what percentage of their income is going to go into their retirement plan. They can do that based on their household budget. In a defined benefit plan, what happens is that based on your tenure, within that said organization, you are given a defined benefit, usually up until you pass away, and/or including if you want to pass it on to your spouse.
"Now if you look at the legacy problems that companies like GM are having, and if you look at the revenue that would be saved if they did not have that as an outstanding debt, and think about who is the largest employer currently in our local area, that would be the County.
"Imagine, in a time where we see lower revenues based upon lower values of property, and state funds that are going to be lower coming in, and imagine the largest employer continuing to put people out who are going to have a defined benefit that we must pay for.
"If you allow the individual, by empowering them, to save on their own, not only will they have that retirement plan for themselves, but you will take much of the burden off of the County."
Gilbert, in this single answer, demonstrates why he deserves a seat on County Council. At least he understands the issue.
