Would move all future employees to 401(k) plans
By Eric Boehm | PA Independent
HARRISBURG — Future state and public school employees will not be eligible for the state's existing public pension system that is more than $35 billion in the red under legislation that was announced by top GOP senators on Tuesday.
"Over the past few decades, virtually all of the private sector has shifted to defined-contribution retirement plans," said Senate Majority Leader Dominic Pileggi, R-Chester. "It's time for Pennsylvania government to do the same."
Opponents of the switch have warned in the past that moving to a defined-contribution plan will do little to alleviate the rising costs in the existing pension system, because those benefits have been earned by existing employees.
Pennsylvania is going to pay about $1.7 billion to pensions next year, a figure that will climb to more than $4 billion by 2016.
“A switch to a defined-contribution plan will benefit Pennsylvania taxpayers by forcing fiscal discipline," said state Sen. Jake Corman, R-Centre. "Retiree benefits will become predictable and sustainable, costs will be easily defined, and future liabilities will be fully funded. It's an excellent choice prospectively."