Ortitay Supports Bipartisan Pension Reform
HARRISBURG – Rep. Jason Ortitay (R-Washington/Allegheny) today announced the passage of bipartisan reform of the state’s public pension systems. Currently, the State Employees' Retirement System (SERS) and the Public School Employees' Retirement System (PSERS) have a joint debt of more than $50 billion, and are at serious risk for failing.
The new plan is anticipated to result in billions of dollars in savings over the next 32 years.
“The weight of public pension costs are driving up local property taxes and overwhelming state and local governments,” Ortitay said. “Failure to reform the current system could require massive tax increases and put the benefits of state employees, teachers and retirees, who are facing this crisis due to no fault of their own, in jeopardy.”
Under the pension reform plan,
Senate Bill 1071, state and school employees, first hired on or after Jan. 1, 2018, would be enrolled in a hybrid retirement plan, which would combine both defined contribution (DC) and defined benefit (DB) components. The bill would only effect new employees, and would not take away any benefits already earned by current employees or alter benefit calculations for current employees.
The DB component of the hybrid plan would provide a predictable pension benefit for future retirees based on the first $50,000 of income. Any income above $50,000 would be covered through the 401(k)-type, or DC, plan which would allow participants to tailor their investments to their own needs, with at least 10 investment options.
Under this plan, the future pension investment risk facing the state, school districts and taxpayers would shift to members of the retirement plans as hybrid tier participation grows. The Commonwealth and its taxpayers would be more sheltered from risk, irrespective of market performance. Savings realized from the reform bill would be used to pay down the accrued unfunded liability of the state’s pension system.
“As promised, when I was sworn into office, I declined to take the state pension made available to me because I was aware of the enormity of the pension crisis and wanted to lead by example,” Ortitay said. “Today’s vote was a good first step toward resolving that crisis.”
Senate Bill 1071 is now headed back to the Senate for concurrence.
Representative Jason Ortitay
46th Legislative District
Pennsylvania House of Representatives
Media Contact: Morgan Wagner
mwagner@pahousegop.com
RepOrtitay.com