Harrisburg – A significant plan to reform Pennsylvania’s costly state pension systems was approved today by the Senate by a vote of 28 to 19, according to Senate Republican Leaders.
Senate Bill 1 addresses the monumental pension crisis facing Pennsylvania and represents a significant step toward helping to control state spending. This substantial legislation restructures the state’s two public employee pension systems – the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS) – in order to make them viable in the long term.
“Senate Bill 1 creates significant savings by restructuring the systems while reducing liabilities and preserving current employee retirement benefits. School districts will find themselves with additional resources to direct toward the classrooms, instead of simply raising property taxes,” said Senate Majority Leader Jake Corman (R-34). “Today we took an important step toward getting the taxpayers out of the risk business with pensions while shielding employees, taxpayers and retirees security from political risk.”
“Reforming public pension benefits is a primary goal for Senate Republicans as we look towards balancing the 2015-16 state budget,” said Senate President Pro Tempore Joe Scarnati (R-25). “The pension crisis facing our state did not arise overnight and requires that we work together to enact responsible reforms in a strategic manner. I am very pleased that Senate Bill 1 makes these necessary reforms, with lawmakers also leading by example and moving ourselves into a defined contribution plan upon re-election.”
With its projected $18.3 billion in savings, Senate Bill 1 provides six times more savings for the Commonwealth and school districts than the Governor’s proposal, which would increase the Commonwealth’s debt by $3 billion.
Watch Senator Bob Mensch’s comments on Senate Bill 1 here: https://pasen.wistia.com/medias/ptqiasc28z.
“Senate Bill 1 takes a vital step toward meaningful pension reform,” said Senate Appropriations Chair Pat Browne (R-16). “I applaud my colleagues on passage of this important measure and look forward to continuing discussions on this legislation as it moves forward.”
“We must get taxpayers out of the risk business with pensions, and this legislation represents a responsible and fair first step toward that goal,” said Senate Majority Whip John Gordner (R-27).
“Today’s vote is about the sustainability of the state’s pension system,” said Senator John Eichelberger (R-30). “SB 1 provides employees with new benefits, choices in benefits and ownership over their investments.”
The features of Senate Bill 1 include:
- All new state and public school employees will be enrolled in a mandatory, 401-k type Defined Contribution Plan, similar to those used by private sector workers.
- Members of the General Assembly, upon election or re-election, will be enrolled in the same Defined Contribution Plan as state and public school employees.
- Current employees’ previously earned benefits will not be changed.
- Current employees will then be able to choose between increasing their pension contribution or electing to lower their future benefits.
- There will be no changes to current retirees’ benefits.
- A Public Pension Management and Asset Investment Review Commission made up of investment professionals and retirement advisors, will be established to make recommendations to the General Assembly and the Governor. Among their duties will be to evaluate the performance of current investment strategies and procedures of both state retirement systems regarding rates of return and associated fees paid for fund management.
Restructuring the public pension system is not a new issue to the Senate. Over the last two years the Senate has held numerous hearings on the issue, including one most recently last month. The information gathered during those hearings served as a valuable resource and led to the drafting of Senate Bill 1. In addition, much of SB 1 mirrors that of SB 922 from 2014, which was thoroughly vetted by the Senate Finance Committee during public hearings.
“Pensions have been discussed in these halls for years. Today was the day we stopped talking and began taking action,” stated Corman.
CONTACT: Sarah Stroman email@example.com (215) 541-2388