Pension overhaul bill headed to Wolf’s desk

HARRISBURG — After years of wrestling with the issue, Pennsylvania’s Republican-controlledlegislature is sending Gov. Tom Wolf legislation to reduce the cost of pensions for state workers and public school teachers.

Lawmakers in the House of Representatives on Thursday followed their Senate colleagues in approving a bill that would shift at least some benefits for future state and public school employees into 401(k)-style plans.

The goal is to create a system that will relieve taxpayers of the entire liability for funding publicemployee pensions. Some critics have said the changes would do little to address the $62 billion debt held by the state’s two biggest pension funds. And some Democrats have balked at shifting away from the state’s traditional and more generous benefit plan, which they argue helps attract good workers and ensures a predictable and stable retirement.

Mr. Wolf, a Democrat, has said he supports the measure and is expected to sign it Monday.

In a statement, he called the pension bill “an example of how Harrisburg can come together to make progress on issues that matter to the people of Pennsylvania.”

Lawmakers have been attempting for at least five years to reach a consensus on the best way to address the financial strain retirement obligations costs put on the state budget.

During Thursday’s debate on the House floor, which led to the 143-53 vote to pass the measure, Rep. Mike Tobash, R-Schuylkill, acknowledged that the bill does not solve every problem, but still called it “forward thinking” and “proactive.”

“This is groundbreaking legislation,” said Mr. Tobash, who has been key to crafting recent pension reform efforts. “Some will say that this not a full loaf ... but this pension problem we’ve got is crushing our schools, it is destroying our budgets.”

The bill would affect only future state and public school employees who receive benefits through the state’s two big pension funds.

Under the proposal, new employees, starting in 2019, would be given two options.

They could choose a hybrid plan that steers a percentage of their pay into a 401(k)-style plan, and a portion of their pay into accounts receiving the current pension benefit. In the hybrid retirement-savings plan, the employer contribution would range between 2 percent and 2.25 percent for both teachers and state employees.

Or they could switch entirely into a 401(k)-style plan that requires them to kick in 7.5 percent of their salary. In that option, the employer match would be 2 percent for teachers and 3.5 percent for state workers.

Current employees could opt in, but would not be forced to participate in the new plans. State troopers and corrections officers hired in the future would be exempt from the changes, and current retirees would not lose benefits.