Pennsylvania’s Senate Bill 1, which moves employees with non-high-risk jobs into hybrid retirement plans, has graduated to a law.
Gov. Tom Wolf gave the state pension reform bill the green light Monday. It was passed by the Senate on June 5 and the House of Representatives on June 8.
“Today is yet another demonstration that by working across party lines and branches of government, we can address important issues,” Wolf said in a press release. “The common thread that runs through all of these successes is not just the policy changes that result from this hard work, but also that we are solving the problems that the citizens of Pennsylvania face every day. And now, we can add one more success to that list—pension reform.”
Projected to save more than $5 billion and shield taxpayers from $20 billion or more in additional liabilities (should state investments fail to meet projections), Senate Bill 1 is a hybrid pension that moves employees in non-high-risk jobs into a hybrid retirement system where they will receive half of their benefits from the current taxpayer-funded plan and half from a 401(a) defined contribution plan. While new employees hired after Jan. 1, 2019, can choose to solely participate in the DC plan, current employees will be given 90 days to decide whether or not they’d like to opt-in.
“Senate Bill 1 represents the needed long-term reform and stability our school districts have been calling for and need,” said John M. Callahan, assistant executive director, Pennsylvania School Boards Associations. “The intent of Senate Bill 1 is to place our future employees’ retirement system on a viable path that will reduce investment risk by 53% or $15.5 billion over time. This plan protects taxpayers from jarring tax increases and/or draconian program cuts. Senate Bill 1 ensures that our schools will have a retirement plan that is both competitive and sustainable.”