Pa. pension reform legislation begins circulating
Gov. Tom Corbett could get his wish on reform of the state-administered pension systems.
Sen. Mike Brubaker, R-Lancaster County, and Rep. Chris Ross, R-Chester County, are taking the lead on one of the big issues in this year’s 2013-14 budget debate.
Neither was immediately available for comment on when the bills could be introduced.
Corbett called for legislation that would move new employees into a defined-contribution system in 2015.
The governor also wants to change the formula for future benefits in current employees’ plans. Beginning in 2015, he has proposed reducing the multiplier used to determine future benefits by 0.5 percent. “Final salary” under the Corbett model would be based on a five-year average rather than the current three.
Pensionable compensation would be capped at 110 percent of the average salary of the previous four years, while the ceiling on pension income would be set at the Social Security wage base, which is $113,700 for 2013.
Meanwhile, the 2013-14 budget would reduce the annual increase in the employer contribution limit to the pension funds to 2.25 percent, instead of the 4.5 percent increase scheduled to take effect. That amount would increase by 0.5 percent per year until it reaches 4.5 percent again.
“Collectively, without these needed reforms, pension costs will consume approximately 60 percent of all new revenues in the 2013-14 fiscal year,” the memos state. “That translates to more than $500 million, leaving little to fund the growth in core programs and services.”
The Senate is in session today and tomorrow, while the House comes back May 6. The 2012-13 fiscal year ends June 30 and the governor has said he wants pension reform included in the 2013-14 budget.