HARRISBURG—Legislation sponsored by Rep. Warren Kampf (R-Chester/Montgomery) to reform Pennsylvania’s two large and unsustainable public pension systems has passed the House State Government Committee and is headed to the whole House for a vote.
“Our public pension liability is expanding at an alarming rate and threatens the quality of our education system and the economic well-being of taxpayers,” Kampf said. “We cannot continue adding workers to it without severe consequences. These two funds have been a drag on state and school district budgets for years, and the taxpayers are forced to pay for the shortfalls. We need a retirement plan for future employees that is fair, but never puts us in this crisis again.”
House Bill 727 would place future state workers and school district employees into an employee-directed defined contribution plan, similar to a 401(k) system, rather than the current defined benefit plan.
Pennsylvania funds two large pension systems, the State Employees’ Retirement System (SERS) and the larger Public School Employees’ Retirement System (PSERS). Both are underfunded by more than $53 billion and are requiring larger shares of state and local school districts’ budget dollars to keep up with the funding requirements imposed by the state.
“Through a combination of the 2008 economic collapse, years of underfunding and prior administrations’ unwillingness to make the tough choices, our pension system is now at a point that threatens every Pennsylvania taxpayer at the state and local level,” Kampf said.
Kampf’s legislation would change the retirement system for new hires to a defined contribution system that more closely matches the retirement plans in which most Pennsylvanians working in the private sector are enrolled.
“By moving to a defined contribution system we will allow school districts and state government to plan for the future using definable costs,” Kampf said. “This legislation relieves taxpayers of the burden of market fluctuations and the historic mishandling of pension obligations for future employees. This is a change our school districts need so they can continue providing quality education, and taxpayers are asking for it in order to protect their household budgets.”
Representative Warren Kampf
Pennsylvania House of Representatives
Media Contact: David Foster