Pivotal Pension Reform Passes to Wolf
Yesterday, the General Assembly passed landmark legislation to free homeowners from skyrocketing property taxes, make school budgets go further, and protect public employees from politics.
SB 1 bill reforms the pension system by placing new state employees and school teachers in a defined-contribution retirement plan, similar to a 401(k). The bill passed the House of Representatives 106 to 89 and the Senate concurred with a 29 to 20 vote.
Please take a minute to thank your lawmakers for working to get politics out of pensions.
For years, public servants’ retirement benefits have been at the mercy of political whims, with past legislatures making empty promises. Pension underfunding, along with market downswings, have left taxpayers with a $53 billion pension liability and skyrocketing local property taxes (an extra $600 per homeowner since 2008-09).
SB 1 not only stops the bleeding, but also benefits public employees by giving them stability, portability, and protection from political manipulation through a defined-contribution plan. The bill also provides employees with a cash-balance plan, adjusts the calculation of lump sum withdrawals to make them revenue neutral, and reduces “pension spiking” practices. SB 1 also puts lawmakers in the same defined-contribution plan as new employees, once they are re-elected.
The bill would save about $11 billion over the long-term.
Meanwhile, Governor Wolf continues to insist we do not have a pension crisis. A veto would be a huge blow to the commonwealth, paving the way for future credit downgrades, education cuts, and tax hikes.