PA Bill Would Establish Mandatory DC Plan for Public Sector

Pennsylvania House Bill 779 was introduced March 9 and immediately referred to the State Government Committee. The bill would establish a mandatory defined contribution plan for all public employees and appears to block new participation in local supplemental savings plans as well. 

All of its sponsors are Republican and the list of sponsors includes the chair of that committee. “Many of our municipal pension plans are deficiently funded and, of course, the debt of our two state pension systems exceeds the total of all other public debt in Pennsylvania,” said the bill’s author, Rep. John D. McGinnis (R-Blair) in his sponsorship memo.

The bill would set up a mandatory DC plan for all state and municipal employees, including teachers, hired on or after Nov. 30, 2017. Employers would match employee contributions dollar for dollar up to 5% of salary, with a three-year vesting schedule. 

Language that appears to pre-empt new employee enrollment in any local supplemental savings plans is near the very last section of the bill in its current form: “The provisions of any statute that provides for local retirement benefits shall not apply to a public employee employed after November 30, 2017.”