Pennsylvania pension reform proposal would close DB plans to new hires
By Rob Kozlowski | February 5, 2013 2:06 pm
Pennsylvania Gov. Tom Corbett announced a pension reform plan Tuesday that includes a proposal to close the defined benefit plans of the state's two retirement systems to new employees in 2015.
The plan comes as a result of the retirement systems' combined $41 billion in unfunded liabilities and the stress of increasing pension contributions on the state's budget, according to a news release from the governor's office.
The proposal would close the defined benefit plan of the $25 billion Pennsylvania State Employees' Retirement System to new employees on Jan. 1, 2015, and close the $49.8 billion Pennsylvania Public School Employees' Retirement System to new employees on July 1, 2015. Both retirement systems are based in Harrisburg.
New employees would automatically be enrolled in a new 401(a) plan, with SERS participants required to contribute at least 6.25% of their salary to the plan, while PSERS participants would be required to contribute at least 7.5%.
The current employee contribution rates to the DB plans of 5% to 10% for SERS participants and 5.25% to 10.3% for PSERS participants would remain unchanged.
The governor's plan — Keystone Pension Report: A Discussion of Structural Reform and Relief to Pennsylvania's Retirement System for Long-Term Sustainability — can be found at www.portal.state.pa.us/portal/server.pt/document/1319665/pension_plan_booklet_pdf.
Pamela Hile, SERS spokeswoman, wrote in an e-mail that the retirement system does not immediately have a statement.
Evelyn Tatkovski, PSERS spokeswoman, and Christine Cronkright, spokeswoman for Mr. Corbett, did not immediately return phone calls for comment.