SUNBURY— Pennsylvania is moving away from a defined benefit system for future public school and state employees. The state senate passed the bipartisan bill earlier this week and it now heads to the state house for consideration.
John Gordner (R-27th, Berwick), state senator was recently on the On The Mark program and explains what changes we will see from this bill saying, “The biggest thing it does frankly is it moves the risk off the tax payer. The person who benefits from the retirement benefit is the going to be one that holds almost all the risk not the tax payer, and that’s really the big difference.”
The bill also provides new and current employees with the option of 401 (k) defined contribution style plan. The plan also a place future hires in one of three retirement plan options says Gordner,
“All state and school employees will need to make a choice as to one of three different options. One of them is a straight up 401(k) plan and then the other two options is what is called a hybrid and basically from dollar one half of it goes into a defined benefit plan and the other goes into a 401(k) plan”
Some critics to the bill say that it isn’t doing enough; Gordner says, “Two years ago in July the House and Senate sent a bill to the governor that would have put all new hires into a 401(k) plan, which is pretty well what is the standard in private industry and Governor Wolf vetoed it. We can do something stronger and have the governor veto it and we are no further along than we were when we sent it to the governor two years ago.”
The proposal doesn’t make any changes to benefits already earned by existing employees or retirees.
