In a landslide vote, Pennsylvania’s state Senate passed a bill Monday that could shift the retirement benefits landscape for most state and school employees come 2019.
Passing by a 40-9 vote, Senate Bill 1 could move employees of non-high-risk jobs into a hybrid pension system, where they would receive half of their benefits from a 401(a) defined contribution (DC) plan and half from the current taxpayer-funded plan.
“I applaud the 40 bipartisan Senators who voted for this bill and thank Senators Scarnati, Corman, and Browne for their leadership on reforming our pension system,” Gov. Tom Wolf said in Monday’s press release. “This pension compromise achieves my foremost goals: continuing to pay down our debt, reducing Wall Street fees, shifting risk away from taxpayers, all while providing workers with a fair retirement benefit.”
While similar to a 401(k) plan, Senate Bill 1 could save more than $5 billion and protect taxpayers from $20 billion or more in additional liabilities if state investments fail to meet their projections, according to a news release from the office of Sen. Jake Corman, majority leader and chief sponsor of the bill. “Pension reform is not an easy issue to tackle,” said Sen. Joe Scarnati in Corman’s news release. “Changes must be made, but we also must acknowledge current retirees and the investments of current state employees.”
Employees hired after January 1, 2019, could elect to receive all benefits from the new DC plan, while current workers will have a 90-day window to decide whether they’d like to opt-in.
The bill has been sent to the state’s House of Representatives for consideration.