Pa. takes new step on troubled public pension plans

Associated Press

HARRISBURG — Pennsylvania is moving to cut costs again in its big public pension plans, among the nation’s most troubled.

In this file photo, Gov. Tom Wolf talks with the media after a tour at York City School District's Ferguson K-8 on Wednesday, Sept. 14, 2016. He was at the school as part of his Schools That Teach tour. Bill Kalina photo

Democratic Gov. Tom Wolf will sign legislation Monday that’s projected to provide a less expensive pension benefits structure for future school and state government employees. It’ll also shift some risk of investment losses off taxpayers and onto the public employees of tomorrow by introducing a 401(k)-style benefit.

It’s Pennsylvania’s second pension benefits reduction for future employees in eight years. About one-third of U.S. states already administer a mandatory or optional 401(k)-style retirement benefit for employees.

Olivia Mitchell at the University of Pennsylvania’s Pension Research Council says the bill eventually will provide some relief from pension costs. But, Mitchell says the legislation doesn’t fix the funding gap in the current pension plans.