Corbett Favors Defined Contributions to Cut Pension Costs

Republican gubernatorial candidate Tom Corbett says defined contribution plans need to be on the table, when Pennsylvania lawmakers debate reforming public employee retirement plans.
Right now, state workers and public school employees receive set pensions.
Several Senate Republicans want to put future employees on 401-k-style plan, where the state contributes money during a person’s career, but doesn’t spend any more once he or she retires.
Corbett says that’s a logical way to reduce costs.

"90 percent of the businesses I’ve talked to have gone away from a defined benefit program. Have gone to a combined contribution program or some hybrid. And we are certainly looking at that."

The Pennsylvania State Education Association and other public employee unions oppose a shift to defined contributions.
The next governor will need to address a multi-billion dollar pension payment that’s due 2012. Earlier this year, the House passed a bill increasing the retirement age for future public employees, and requiring a longer period of service before they’re vested into pension programs.
However, the measure keeps the current defined benefit system in place.