Published: Tue, June 06, 2017
National | By Rosalie Gross

Senate Passes Landmark Pension Reform Plan

Senate Passes Landmark Pension Reform Plan

Gov. Tom Wolf's office says the Democrat supports legislation advancing in the Pennsylvania state Senate to overhaul retirement benefits for future state government and public school employees. That, eventually, will shift risk from taxpayers to employees, but it does nothing to reduce the $4 billion a year that the state commits to pensions, or reduce the percentage of payroll that school districts must pay, a whopping 34 percent.

Bartolotta and her colleagues in the region, who are all Republican, voted for the measure that creates a 401 (k)-style plan and hybrid options for state employees and public school employees hired after 2019 and intends to pay down pension debt incurred since the economic downturn in 2008.

But actuaries said that creating the new benefits plans still leaves Pennsylvania's massive pension debt intact, and won't stop the rising pension-obligation payments that are squeezing the budgets of school districts.

Future state troopers and corrections officers are exempt, and current lawmakers and public employees can choose to join a new plan.

The Jefferson County Republican whose 25th Senatorial District includes Clinton County said the legislation could "transform public employee retirement benefits for the 21st Century and limit future financial risks for taxpayers".

The bill passed a committee vote on a near-party line basis in the Republican-controlled Senate, hours after a draft of the legislation became public. Majority Leader Jake Corman (R-Centre) is the bill's prime sponsor and likened the pension crisis to an illness.

Pennsylvania's two big pension systems face a roughly $60 billion projected debt.

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Baker said there are several compelling reasons for changing the structure of the statewide pension systems for state workers and educators. Most employees who leave service with 20 years or less of service time would see a better benefit under the new system than they would have earned under the current system due to the portability of the 401 (k)-style plan. "There is the sharp contrast with the benefits available under most prevailing pension plans for private sector workers". Senators voted to amend Senate Bill 1 which addresses retirement options for state employees.

That debt stems from years of lawmakers and governors deferring payments into the system and approving pension-benefits increase, plus disappointing investment performances in some years.

"It's a great day", was state Sen.

Aument and Martin, in separate emails Monday, said they supported the bill because it would move risk away from taxpayers.

About one-third of US states already administer a mandatory or optional 401 (k)-style retirement benefit for employees, according to the National Association of State Retirement Administrators.

He said it won't provide relief to schools and taxpayers in the short term.

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