Yahoo Finance Pennsylvania Law 'Fluke' Doesn't Account For Cost Of Living Adjustment For Over 70,000 Retired Public Employees
Public employees who retired in Pennsylvania before 2001 may not have the steady retirement they thought they would. A fluke in Pennsylvania law has prevented about 70,000 public employees from receiving cost-of-living adjustments (COLAs) to their annual pensions. With inflation over the last 23 years, it seems like a heavy oversight that these residents are now paying for.
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Jacqualyn James, an 88-year-old retired teacher, exemplifies this issue. For 30 years, she taught high school students in Stroudsburg, Pennsylvania. She regularly contributed to her pension, the Public School Employees' Retirement System of Pennsylvania (PSERS). "I expected it to last my lifetime," she told NBC News.
While her $25,000-a-year pension has lasted, it's now only worth half what it was when she retired in 1998. James and the other 70,000 retired public employees have not received a COLA on their monthly payments for over 20 years.
Each dollar in these retirees' pensions is worth the same nominal amount as the year they retired. For James, that means every dollar she was promised when she retired is worth about 51 cents today. Because many public schoolteachers, like James, lack access to Social Security — an issue we won't dive too deep into here — the financial strain becomes even more troublesome.
In 2001, some provisions were made under the enactment of Act 9, which increased pension benefits for public workers. The problem is that these provisions did not include anyone who retired before then. So, these retirees now face significant financial hardships.
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The Pennsylvania Association of School Retirees (PASR) has been advocating for these retirees and continues to do so. In January 2024, the Pennsylvania House passed HB 1416, which would provide a COLA of 15 to 25% for those who retired before July 1, 2001. However, the PA Senate did not act on the bill.
PASR continues to engage the public and Pennsylvania legislators to pass this bill so all affected retirees can get the COLA they deserve. They have expressed that a growing number of legislators are expressing support for the bill.
"We continue to be cautiously optimistic that a COLA, in the form of HB 1416, will be enacted this year," PASR posted on their website.
While policy changes certainly need to be made to provide adequate pension adjustments, this unfortunate turn of events demonstrates the importance of a diversified retirement plan. Are there other oversights that may occur in the future that could affect your retirement accounts or pensions? It's hard to know until the time comes.
One thing you can do, though, is make sure you have the right financial advisor on your team to guide you toward the retirement and financial future that you want. Take the steps you can to ensure financial stability in your own retirement.
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This article Pennsylvania Law 'Fluke' Doesn't Account For Cost Of Living Adjustment For Over 70,000 Retired Public Employees originally appeared on Benzinga.com
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