HARRISBURG — Sen. Pat Stefano (R-32) today voted for passage of an historic pension reform measure that will protect benefits earned by retirees and current employees while shielding taxpayers from further risk.
Senate Bill 1, which Stefano co-sponsored, would reduce long-term costs to taxpayers by creating a 401k-style pension system for newly hired employees who are eligible to participate in one of the state’s two public employee pension systems – the State Employees’ Retirement System and the Public School Employees’ Retirement System.
The bill would not affect benefits already earned by current employees or retirees. However, current employees would be given the option to either increase their contribution rate or accept a reduced benefit going forward. Retirees would not be affected by Senate Bill 1.
“State pension payments are scheduled to increase by $1 billion this year alone, placing a huge and unsustainable burden of state and local governments that will result in higher local property taxes, less money for worthwhile state programs and fewer education dollars available to help students in the classroom,” Stefano said. “Today we took an important step toward getting the taxpayers out of the risk business with pensions and protecting the security of employees, taxpayers and retiree.”
Stefano said that when he was elected to the State Senate, he chose not to join the pension system because he had such grave concerns about its sustainability. He said action on Senate Bill 1 will address those long-standing concerns.
A non-partisan analysis by the Public Employee Retirement Commission determined the measure would save $18.3 billion over the next 30 years. It provides seven times more savings for the Commonwealth and school districts than the Governor’s proposal, which would increase the Commonwealth’s debt by $3 billion.
The bill would require lawmakers to participate in the same pension system as newly hired employees. It also creates a new commission to study investment options and fees associated with managing pension system assets.
Senate Bill 1 was sent to the House of Representatives for consideration.
CONTACT: Ben Wren (717) 787-7175