A Senate committee has made changes to a House bill overhauling future state and public school employees’ pension plans in Pennsylvania. The amended measure scales back benefits and increases the retirement age for incoming workers.
Senate Finance Committee Chairman Pat Browne says a big problem with Pennsylvania’s current defined benefit plan is the fact the state bears the brunt of the cost, when the markets fail like they did in 2008.
He concedes unions and many Democrats don’t want to switch to a defined contribution system, where employees pay the price for underperformance.
"So what we’re looking to is to have a shared responsibility. So if the system doesn’t make its investment goals, part of that loss would be borne by the employee. And it’s half of a loss is borne by an employee, up to an additional two percent of payroll."
Under Browne’s amended bill, employee rates would be readjusted every three years.
Many Senate Republicans had called for a full switch to a defined contribution system.
Brown says that’s his preference, too but he acknowledges the House would never accept the change.
One potential hang-up: language voiding the bill, if a measure creating a Legislative Fiscal Office isn’t also signed by the governor.
The fiscal office bill is, in turn, tied to a natural gas severance tax measure but Pat Browne, a Lehigh County Republican, says he’s not worried.
"Well I don’t want to have any things fall by the wayside. I think we’re really close to getting them all done, and I have no interest in seeing any of them go. So that’s my goal – to get them all done."
Browne says the bill which splits the cost between employer and employees would be the only one of its kind in the country.