State takes new step on troubled pension plans

Pennsylvania is moving to cut costs again in its big public pension plans, among the nation’s most troubled, after Democratic Gov. Tom Wolf signed hard-fought legislation Monday that is projected to provide a less expensive pension benefits structure in the coming decades.

Wolf signed the bill in a ceremony in the Capitol Rotunda attended by leaders of the Republican-controlled Legislature in which they congratulated each other on bipartisan legislation after years of disagreements.

In his brief remarks, Wolf called the bill fair to taxpayers and to public employees. But he also acknowledged its limitations in light of a pension debt, tabbed at roughly $60 billion and rising, that is demanding payments of roughly $3 billion more per year from the state compared with a decade ago.

“Let’s be clear: This plan addresses our liability in the only real and responsible way possible, by changing the structure of pension benefits,” Wolf said. “The fact is, we cannot accelerate the shrinking of our liability on the backs of our current employees.”

In addition to reducing the retirement benefits of most future public school and state government employees hired after 2018, it will also shift some risk of investment losses off taxpayers and onto the public employees of tomorrow by introducing a 401(k)-style benefit.