Today (June 5) the Senate approved legislation reforming Pennsylvania’s two largest public pension systems, the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS).
Senator Elder Vogel Jr. (R-47) praised the bipartisan passage of this historic reform which both limits future taxpayer liabilities while also still providing a competitive retirement benefit for school and state employees.
“For years, school boards and fiscal watchdogs throughout Pennsylvania have been sounding the alarm about the unchecked growth of the state pension systems. In fact, the exponential growth of pension obligations is the #1 reason cited by school boards for property tax increases,” Vogel said. “This legislation, approved by bipartisan majorities in the Senate, will protect taxpayers from billions in financial liabilities while still providing a competitive, and most importantly, sustainable retirement plan for future employees.”
Senate Bill 1 would not affect retirement benefits for those who are already retired or current public-sector employees. The legislation would provide newly hired employees with different retirement options to suit each individual employee’s needs, including a defined contribution plan that is similar to the 401(k) plans offered by most employers in the private sector.
New employees could also choose between two hybrid options that offer a smaller defined benefit plan than the current system, in addition to a defined contribution component.
It is estimated that the plan will save taxpayers more than $5 billion over the next 30 years, and investment management fees would be targeted for a reduction of an additional $3 billion. Because the reforms shift risks away from taxpayers, the plan could ultimately save taxpayers $20 billion or more if state investments fail to meet projections.
Additional details about Senate Bill 1 are available here.