Jun. 14, 2016
HARRISBURG – Rep. David Millard (R-Berwick) today joined the majority of his colleagues in the House in passing needed 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.
The new plan is anticipated to result in billions of dollars in savings over the next 32 years.
“The plan passed today protects the benefits earned by current employees and retirees, who are facing this crisis through no fault of their own, and puts the systems on a more sustainable path going forward,” Millard said. “Without reform, not only are Pennsylvanians at risk for massive tax increases, but money that could have been dedicated to our schools and communities, will continue to fund a broken system.”
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.
Senate Bill 1071is now headed back to the Senate for concurrence.
Representative David Millard
109th District
Pennsylvania House of Representatives
Media Contact: Morgan Wagner
mwagner@pahousegop.com
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