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Gov. Wolf to sign pension reform bill on Monday

//June 9, 2017

Gov. Wolf to sign pension reform bill on Monday

//June 9, 2017

The Republican-led proposal, drafted as Senate Bill 1, cleared the state House Thursday by a 143-53 vote after passing the Senate at the start of the week.

S.B. 1, which many elected officials agree is a big step forward for the commonwealth in spreading out future financial risk, offers three retirement options to new public school and most state employee hires after 2018, including one to move retirement benefits into a 401(k)-style defined-contribution plan.

The other two options would narrow the traditional defined-benefit pension plan and blend it with a defined-contribution plan. These new options are known as side-by-side hybrid plans.

The proposal would not impact the pension benefits of current employees and retirees. However, current employees could choose to opt into one of the new plans.

Republicans say this historic reform plan will stop the bleeding in the state pension plans and should save taxpayers more than $5 billion. An additional savings of up to $3 billion is projected in terms of reduced costs and fees for investment management.

That said, S.B. 1 is not a comprehensive solution because it doesn’t directly tackle the huge unfunded liabilities tied to the two state pension funds. The compromise is intended to mitigate future costs to the state because employees are sharing more of the costs, which should keep the outstanding liability in check.

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