HARRISBURG – Senate Majority Whip Pat Browne (R-16), Senate Majority Leader Dominic Pileggi (R-9), Senate Appropriations Committee Chairman Jake Corman (R-34) and Senate Finance Committee Chairman Mike Brubaker (R-36) will soon introduce legislation to change Pennsylvania’s pension system for government employees from a defined benefit plan to a defined contribution plan, similar to a 401(k) or 403(b) plan.
The new defined contribution retirement system will be provided for all state employees and public school employees hired on or after December 1, 2012.
“Significant policy decisions regarding Pennsylvania’s pension system must be made soon,” Senator Browne said. “Without significant changes in the design of Pennsylvania’s pension system, including a switch to a defined contribution system, the long-term costs will be unaffordable to Pennsylvania taxpayers.”
“Over the past few decades, virtually all of the private sector has shifted to defined contribution retirement plans,” Senator Pileggi said. “It’s time for Pennsylvania government to do the same.”
“A switch to a defined contribution plan will benefit Pennsylvania taxpayers by forcing fiscal discipline,” Senator Corman said. “Retiree benefits will become predictable and sustainable, costs will be easily defined, and future liabilities will be fully funded; it’s an excellent choice prospectively.”
“With a defined contribution plan, the employee has ownership rights and the assets are portable,” Senator Brubaker said. “Additionally, investment strategies can be tailored to the retirement and investment needs of individual employees.”
The new pension system will be known as the Public Employees’ Retirement System. The legislation will be introduced in early June.