The state Senate voted today to pass a new pension reform bill that was advanced by the Senate Appropriations Committee Sunday night. The House is expected to vote on the bill Thursday.
The Senate passed the bill 40-9 after closed-door negotiations between Senate and House Democrats and Republicans, and Governor Tom Wolf.
“This is the medicine that will move us forward in a way that future Legislatures will be proud of,” Senate Majority Leader Jake Corman (R-Centre) said prior to today’s vote, according to the Patriot News.
The only Republican to vote against the bill was Senator Scott Wagner (R-York). Wagner voted against the bill both in the Appropriations Committee and in the floor vote. He argued that the system should go to a full 401(k) style system. Wagner is also running to challenge Wolf in next year’s Gubernatorial election.
The bill would create three options for new state employees to choose from, two of them are hybrid plans allowing workers to put money into both the pension system and a 401(k) style system. The third option is a full 401(k) system with no pension guarantee when the employee retires.
The bill will likely pass the House with bipartisan support, but more will be known later on Tuesday as House members have time to read the full bill and discuss it.
Wolf has already said he will sign the bill if it gets to his desk.
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9 Responses
This is a very disappointing development. The user identifying as “taxpayer” as touched upon the key issues, especially the assumed rate of return, which is artificial and unrealistic. The debt will only grow larger for the forseeable future without adequate funding reform.
I can’t believe these clowns in government! The entire rest of the world has gone to 401k’s ….but not our state government. A “hybrid” that is total BS because it’s the same pension plan up to what…50,000, which is WAY more than the average person’s salary! And what is the assumed rate of return…6%? Insane.
First off, the median income in Pennsylvania is over $55,000/year and I suspect it is much higher for those with college degrees, which the vast majority of state workers possess, so you need to make sure you are comparing apples to apples.
The pension benefits are paid for mostly by market gains (over 70 percent). If you reduce a defined benefit, you are reducing total compensation, so you would have to make up for that in salary negotiations by increasing salaries in order to maintain parity and attract talent, and salaries are 100 percent taxpayer funded. So take your pick: a responsibly managed pension system that funds a significant portion of compensation via market gains, or 100 percent taxpayer funded. As a taxpayer myself, I would rather market gains allow us to pay sub-market salaries to state employees than foot the entire bill.
If the General Assembly had not spent years essentially borrowing money from the pension funds by ignoring their obligations, we would not be in this situation. It wasn’t that long ago that the pensions were over 100 percent funded. The employees are the only ones who paid 100 percent of their obligation this entire time. We are getting a deal by having a pension system; we just need more stringent rules to make sure the legislature can’t run up the credit card bill by shirking their pension obligations in the future.
Furthermore, businesses can disappear, but the Commonwealth has been around a long time and can reasonably be expected to be around for a long time to come. The Commonwealth cannot declare bankruptcy and discharge debts, so its debts are good, stable investments to help individuals and businesses balance portfolios and manage risk.
It is good policy and good financial sense to maintain a pension system. Getting rid of the pension system mainly benefits investment companies that skim off employees’ retirement savings by charging fees and percentages. It also lets people who are irrationally jealous of public pensions to stick it to public servants, so I guess there’s always that too.
“Isaac” you must be an insider lackey with talk like that. “Attract top talent.” You mean like Brian Sims, maybe?
wow, did we finally have something where both sides worked together on? I need to read more to see if I agree, but I’m glad they can finally agree to something. Wagner voted No, because he is running for Governor. So for the next year or so, he will never agree, so he has something to run on. Wagner would be bad for PA, don’t let money and bullying win.
Ok, so let the employees CHOOSE their own 401(k) to invest in, not one the one that will be forced on them. What about the elected officials pensions, no changes there? Their caucus employees? The deficits exist if every employee cashed out tomorrow, which will not happen. So I do not understand how the deficit is computed.
You cannot change pensions for existing members except to augment them; it would be an unconstitutional impairment of contracts.
Let’s do something, so that we can say we did something, when we are actually doing nothing; but maybe somebody will think that we actually did something.