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Pension Reform Bill in Pennsylvania Gathering Steam

A measure that would reform the pension system serving the Keystone State’s public-sector employees is coming closer to a vote. HB 1353, introduced by Rep. Mike Tobash (R-Schuylkill/Berks), would offer a new hybrid plan to new employees and seeks to reduce the burden the system places on Pennsylvania taxpayers. 

It is possible that a vote on the measure may take place in the state House of Representatives this week. Gov. Tom Corbett (R) supports the measure, and members of his administration have been lining up support for the bill in the House. 

Tobash’s plan calls for the following: 

  • new state employees would be enrolled in a plan that is a combination of a 401(k)-style plan and traditional pension plan; 
  • all state and public school employees would be enrolled in the same plan;
  • the only state employees who would not be enrolled in the new plan would be those who do not receive Social Security benefits; they would receive an additional defined contribution plan benefit instead;
  • all new employees would be subject to shared risk provisions; 
  • employees who take leaves of absence would continue to be covered by the current pension system; and
  • the bill would not change the benefits of current state employees. 
Bill supporters estimate that the measure would save up to $15 billion over 30 years; the Public Employees Retirement Commission estimates the savings at $11 billion. Supporters also argue that doing nothing ultimately would endanger pensions by bankrupting the state pension system, which has an unfunded liability of more than $47 billion. 

The Public School Employees Association, Pennsylvania’s largest teachers’ union, opposes the plan. They argue that it will save little money and hurt pension balances. The Keystone Research Center contends that the proposal would result in lower investment returns for future employees. 

John Iekel is Senior Writer and Editor for the NTSA Net portal.