HARRISBURG – Restructuring the state pension system is projected to produce $18.3 billion in savings over 30 years, according to an evaluation provided today by the state’s Public Employee Retirement Commission.
“The savings reflect the tangible, structural improvements to the pension system for current and future employees achieved in this legislation,” said Senate Majority Leader Jake Corman (R-34), who was joined by 25 of his colleagues in sponsoring the bill.
Senate Bill 1 restructures the state’s two public employee pension systems – the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS) – in order to make them viable in the long term.
“Senate Bill 1 creates meaningful savings by restructuring the systems while reducing liabilities and preserving current employee retirement benefits,” Corman said. “SB 1 gets the taxpayers out of the risk business with pensions while shielding the taxpayers’ and retirees’ security from political risk.”
Pennsylvania law requires that all pension and retirement code legislation receive an actuarial cost analysis performed by the PERC. PERC works with an independent actuary to determine the potential cost or savings to any pension related legislation. Both of the pension systems, SERS and PSERS, also completed an actuarial analysis of potential costs or savings and contributed their projections to PERC.
Under this evaluation, Senate Bill 1 provides seven times more savings for the Commonwealth and school districts than the Governor’s proposal, which would increase the Commonwealth’s debt by $3 billion.
The features of Senate Bill 1 include:
- All new state and public school employees will be enrolled in a mandatory, 401k-type Defined Contribution Plan similar to those used by private sector workers.
- Members of the General Assembly, upon election or re-election, will be enrolled in the same Defined Contribution Plan as state and public school employees.
- Current employees will be able to choose between increasing their pension contribution or to elect to lower their future benefits.
- No changes to current retiree benefits.
- A Public Pension Management and Asset Investment Review Commission made up of investment professionals and retirement advisors will be established to make recommendations to the General Assembly and the Governor. Among their duties will be to evaluate the performance of current investment strategies and procedures of both state retirement systems regarding rates of return and associated fees paid for fund management.
To view the PERC meeting, go to www.pasenategop.com
Contact: Jennifer Kocher – email@example.com