Governor Signs Historic Pension Overhaul
Governor Tom Wolf has signed into law Senate Bill 1 (pension reform). The measure would only apply to state and school district employees hired after January 2019. Current retirees and workers in the pension system would not be affected. Those hired after 2019 would basically have three retirement options. The first two are hybrid plans; that is, half defined benefit and half defined contribution. The third option would be all defined contribution, or a 401(k)-style plan. All three options are intended to reduce the future burden on future taxpayers. Pennsylvania State Police and other law enforcement, including Capitol police, would be exempt from the new plan and would be placed in the current retirement system. Future lawmakers would be required to join the new plan, but current lawmakers would be able to choose whether to stay in their current plans or enroll in the new one.
The state Senate approved Senate Bill 1 by a vote of 40-9. Gubernatorial candidate state Senator Scott Wagner (R-York) was the lone GOP “no” vote. He says SB 1 doesn’t fix the current problem or reduce the current debt, which is around $70 billion. He supports putting all new hires into an entirely defined contribution plan. However, that plan was met with opposition from Democratic Governor Tom Wolf and would’ve likely hit another roadblock in the state House. The measure was approved by the state House, 143-53.