Wolf Says Pension Reform Will Trim Liability By At Least $10B
Pennsylvania’s unfunded pension liability stands at $70 billion. In other words, according to the Bureau of Economic Analysis, what Pennsylvania owes in pensions for retired and active state employees and public school teachers is only funded at about 60 percent. Pennsylvania ranks 38th in the country.
But now the state Senate has approved pension reform legislation which would change pension plans for new state employees and public school teachers.
“It's not the perfect dream act that any one of us would have picked. But it does move us forward,” said Gov. Tom Wolf.
Retired and current workers and teachers are in a defined benefit plan.
Under this legislation, new hires would have three options including a 401(k)-style plan. Wolf said he believes a lot of incoming workers might like that approach.
“You might want to work for the state for four years. Well, the old defined benefit plan that took a long time to get vested.. And with a 401(k)-style, it's a lot more portable to the old plan,” Wolf said.
According to the governor, the change will reduce that $70 billion liability.
“Now, that doesn't eliminate it, but depending on your point of view, $10 or $20 billion is a pretty significant amount," he said.
And that, he said, will benefit taxpayers who pay for the pensions.
“What the taxpayers of Pennsylvania could look forward to is a future where this one big unknown uncertain unpredictable variable in the expenditures and costs incurred by their government is going to be mitigated," Wolf said.
The House is expected to approve the bill, and Wolf said he will sign it.
“It”s a big deal and it's a real reform in a pension system that has been crying out for reform for many years," Wolf said.