Wednesday, June 30, 2010

Cost of Pension Reform is Key Factor

A top Senate Republican says Pennsylvania's upper chamber may consider shifting public employees’ benefit plans from pensions to 401-k-style contributions.
A bill passed by the House this month trims benefits for future public employees.
It also raises the retirement age to 65, and requires employees to work for ten years, rather than five, before they’re vested in the state’s pension program.
Senate Majority Leader Dominic Pileggi says GOP senators will begin discussing the measure in caucus later this week.

"Obviously what’s not included in the House plan is any sort of a nod to a defined contribution system or option. And we still have some members of our caucus who feel very strongly about that and would like to see whether that could be worked into what the House bill sent."

A spokesman for the Pennsylvania State Education Association says the teacher’s union opposes a shift to a defined contribution benefit plan.
Wythe Keever says defined benefits save the state money, and are better for both employers and employees.
Under a defined contribution plan, the amount of the contribution is fixed but the benefit is not because it is affected by investments. Under the current defined pension plan, the benefit upon retirement is determined by a set formula, rather than depending on investment returns.

Pileggi says the Senate will consider several factors, as it amends the House version bill and ultimately it's about the total cost of the bill.

No comments: