HARRISBURG – The state senate approved Monday a bipartisan measure to reform pensions for future public school and state employees. The bill moves away from the current defined benefit system. It now offers a side-by-side hybrid option, paring a 401 (k) defined contribution component with a smaller defined benefit component.
Bill co-sponsor Senator Gene Yaw says it’s a major change not only in Pennsylvania, but one of the biggest changes in any pension plan in the country, “What makes it really unique is the fact that there is a defined contribution part of every aspect of this pension plan.”
The bill also provides new and current employees with the option of 401 (k) defined contribution style plan. The plan also places future hires in one of three retirement plan options. Yaw emphasizes the proposal doesn’t make any changes to benefits already earned by existing employees or retirees.
He also says it stops the bleeding in state spending, “Everyday that we hire someone under the old system, it increases our liability. This will stop that liability on behalf of the state. What it does is it shifts the risk basically to the employee and away from the tax payer.”
The Bill now heads to the House of Representatives for consideration.
