Harrisburg – Legislation to modernize Pennsylvania’s costly state pension systems, which are causing increases in school property taxes, cuts to school programs, and now threaten to increase state taxes, was approved today by the Senate Finance Committee.
Senate Bill 1, sponsored by Senate Majority Leader Jake Corman (R-34), restructures the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System — in order to make them viable in the long term.
“Senate Bill 1 provides choices to current and future employees to create a pension plan that they tailor to suit their needs,” said Corman. “Most importantly, it gets the taxpayers out of the pension risk business.”
Restructuring the public pension system is not a new issue to the Senate, which has held numerous hearings over the last two years on the issue. The information gathering during those hearings was valuable and led to the drafting of SB 1. In addition, much of SB 1 mirrors that of SB 922 from 2014, which as thoroughly vetted by the Finance Committee with hearings. The original version of SB 922 that is included in SB 1 was passed by the Finance Committee last year.
“Pensions have been discussed in these halls for years. Now is the time to act,” Corman said.
The features of Senate Bill 1 include:
- All new state and public school employees will be enrolled in a mandatory, 401k-type Defined Contribution Plan similar to those used by private sector workers.
- Members of the General Assembly, upon election or reelection, will be enrolled in the Defined Contribution Plan. The plan provision will be consistent with state and public school employees.
- Current employees must choose between increasing their pension contribution or reducing their future benefits.
- A Public Pension Management and Asset Investment Review Commission made up of investment professionals and retirement advisors will be established to make recommendations to the General Assembly and the Governor. Among their duties will be to evaluate the performance of current investment strategies and procedures of both state retirement systems regarding rates of return and associated fees paid for fund management.
Contact: Jennifer Kocher – email@example.com