Pension Reform Finally Passes
From PA Chamber of Business & Industry
In a whirlwind of activity last week, the General Assembly passed and sent to Gov. Tom Wolf an important public pension reform bill that will help to rein in the what has been unsustainable growth of the state pension systems, shift a significant portion of the risk from potentially under-performing investments off of state taxpayers and help to secure the future sustainability of state and public school employees’ retirement plans. Governor Tom Wolf signed the legislation into law on Monday.
Senate Bill 1, which was passed 40-9 by the Senate last Wednesday and 143-53 by the House on Thursday, offers a choice of three new retirement plan options for new employees hired after 2019 within the State Employees Retirement System and the Public School Employees Retirement System, along with an opt-in provision for current workers. Two of the choices offer hybrid defined benefit, defined contribution plans, while the third option is a defined contribution, 401k-style plan.
Prior to the Senate and House votes on the bill, the PA Chamber sent memos to both chambers urging their support for the measure. The memos noted that while the organization is ready to support additional steps to mitigate rising costs in the near term, it believes that S.B. 1 will put the state pension systems on a better path to stability and sustainability. These beliefs are strengthened through findings by the education advocacy organization PennCAN, which has found that few teachers do better under the existing PSERS pension plan than they would under a plan like S.B. 1; and from the Pew Charitable Trusts, which has noted that the bill would be one of the most – if not the most – comprehensive and impactful reform any state has implemented.