Pa. pension bill heads back to Senate
A major reform bill that would change the state's two large public-sector pension plans by directing new state and public school hires into a combination of a traditional pension and a 401(k)-type benefit is heading back to the Senate.
The House voted 136 to 59 on Tuesday for the amended Senate legislation that would let employees earn a traditional pension benefit on only their first $50,000 of pay, a cap that would increase 3 percent annually.
It would not affect benefits for those already working in state government and public schools and would exempt state troopers.
Newly elected lawmakers also would have to join the new plan, but legislators who are re-elected would not have to switch to the new plan, said Rep. Stan Saylor, R-Windsor Township.
"I think it's a good bill," Saylor said. "I'd like it to do more, but it's a good cost-saving measure."
All House seats and half of those in the Senate are on the ballot this year.
The switch to the defined contribution plan is expected to save the state $5 billion over 30 years.
A step: Rep. Seth Grove, R-Dover Township, said the measure is a step in the right direction.
"Getting a plan is huge," he said. "Having the plan set up mitigates transition costs when we finally get to only a defined contribution plan."
But Grove said he preferred another measure, Senate Bill 1, that would have removed lawmakers from the pension plan. Under that bill, lawmakers would have been forced into a 401(k)-style plan if they were re-elected. Democratic Gov. Tom Wolf vetoed it in July.
Saylor said he also would have liked to see lawmakers removed from the pension system.
What it does: The bill would require workers to contribute 6 percent of earnings on their first $50,000 in pay for the first 25 years of service to the defined benefit plan, a traditional pension in which the worker gets a monthly check upon retirement.
They would pitch in a much smaller amount to the defined contribution plan, similar to a 401(k), but after reaching the salary or 25-year limits, they would pay 7.5 percent of their earnings. The state’s contribution would increase once the employee reaches 25 years and on pay above the salary threshold that starts at $50,000.
Pennsylvania currently has pension debt of more than $50 billion, and the state's taxpayer-paid share is an increasingly significant problem in crafting annual budgets. Any savings from the changes would be used to pay down the pension debt.
All of York County's representatives voted in favor of the bill.
State Rep. Kevin Schreiber, D-York City, was one of the nearly 60 Democrats who crossed the aisle to support the bill.
"We need some form of pension reform, and this is a good compromise," he said. "It doesn't impact current employees or retirees, which has been of great concern not only for those affected but also on the basis of constitutionality."
— The Associated Press contributed to this report.