Log In


Reset Password

House votes for school, state workers' hybrid pension plan

HARRISBURG - A bipartisan vote in the Pennsylvania House on Monday showed fresh momentum in efforts to change the state's two large public-sector pension plans by directing new state and public school hires into a combination of a traditional pension and a 401(k)-type benefit.

The House voted 150-41 for legislation that would let employees earn a traditional pension benefit on only their first $50,000 of pay, a cap that would increase 3 percent annually.

It would not affect benefits for those already working in state government and public schools and would exempt state troopers.

The prime sponsor, Rep. Mike Tobash, R-Schuylkill, called it a major change that would eventually save billions of dollars.

"Future employees will be subject to a plan that is more suitable to a modern workforce," Tobash told colleagues during floor debate.

But opponents described it as an inadequate way to address the skyrocketing costs of public pensions.

"Let's not continue the travesty of pension depredation that's forced on our taxpayers," said Rep. John McGinnis of Blair County, one of 10 Republicans who voted against it. "This is no vehicle to solve our pension woes. It is centered on the very thing that caused our pension woes, the defined benefit plan."

The hybrid plan awaits a final House vote, which could take place Tuesday, before being considered in the Senate.

A spokesman for Democratic Gov. Tom Wolf said he supports adding the 401(k)-style benefit, but is waiting to see the details of whatever might pass the Legislature.

The bill would require workers to contribute 6 percent of earnings on their first $50,000 in pay for the first 25 years of service to the defined benefit plan, a traditional pension in which the worker gets a monthly check upon retirement.

They would pitch in a much smaller amount to the defined contribution plan, similar to a 401(k), but after reaching t he salary or 25-year limits, they would pay 7.5 percent of their earnings. The state's contribution would increase once the employee reaches 25 years and on pay above the salary threshold that starts at $50,000.

Rep. Cris Dush, R-Jefferson, said the proposal does not amount to pension reform.

"We may be making some adjustments, and there will be people who ... will end up on a defined contribution program, and we will be making a small step in that direction," Dush said. "But this goes absolutely nowhere to correcting the problem."

Pennsylvania currently has pension debt of more than $50 billion, and the state's taxpayer-paid share is an increasingly significant problem in crafting annual budgets. Any savings from the changes would be used to pay down the pension debt.