Kampf Backs Pension Reform to Better Protect Taxpayers
HARRISBURG-- Rep Warren Kampf (R-Montgomery/Chester) joined a majority of his House colleagues in passing a public pension reform bill that would place new state workers and public school employees into a new hybrid retirement benefit which includes a mandatory defined contribution of 401(k)-type plan.
“The ever-growing public pension liability is crippling our education system and threatens the well-being of taxpayers,” Kampf said. “We cannot add new workers to the current defined benefit systems. The results would be a financial catastrophe, particularly for our schools and the state budget.”
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.
Senate Bill 1071, which was amended this week, establishes a hybrid defined contribution/defined benefit retirement plan for future state and school employees. The plan applies only to future employees.
State workers hired after Jan. 1, 2018, and school employees hired after July 1, 2018, would include a baseline pension based on the traditional formula of years of service multiplied by 2 percent of final average salary. That defined-benefit plan would change to a 401(k)-style plan for any income earned over $50,000 and for all income earned after 25 years’ service.
“Under the defined contribution system, the responsibility for adequately funding an individual’s retirement rests with the employee,” Kampf said.
“This new system is fair, and reduces the risk of a financial crisis,” Kampf said.
The bill now goes back to the Senate for concurrence on House amendments.
The Public Employee Retirement Commission (PERC) estimates that the bill would save approximately $5 billion over 30 years.
Representative Warren Kampf
157th District
Pennsylvania House of Representatives
Media Contact: David Foster
dfoster@pahousegop.com
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