Jun. 14, 2016
HARRISBURG – Rep. Kerry Benninghoff (R-Centre/Mifflin) today announced the House passed necessary reform of the state’s public pension systems. The State Employees' Retirement System (SERS) and the Public School Employees' Retirement System (PSERS) have reached crisis status with a joint debt of more than $50 billion.
The plan approved today with bipartisan support will protect current employees and taxpayers alike, and is anticipated to result in billions of dollars in savings over the next several decades.
“We simply cannot wait for the state’s retirement systems to go bankrupt before making changes,” Benninghoff said. “Pension obligations are the No. 1 cost driver for the state and local school district budgets, and without reform, not only will taxes skyrocket, but dollars that could have been dedicated to programs serving our communities, helping our seniors and educating our children, will instead, continue to fund a crippled pension 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.
“Without changes, the pension funds face insolvency, the benefits earned by current state employees, teachers and retirees are in jeopardy, and taxpayers face a growing bill,” Benninghoff said. “The plan passed today would protect current employees and retirees, and put the systems on a more sustainable path going forward.”
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 1071 is now headed back to the Senate for concurrence.
Representative Kerry Benninghoff
House Majority Policy Committee Chairman
171st Legislative District
Pennsylvania House of Representatives
Media Contact: Morgan Wagner
mwagner@pahousegop.com
KerryBenninghoff.com /
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