The Pennsylvania House of Representatives passed a pension reform bill to create a hybrid retirement plan for new employees participating in the two state pension funds.
House Bill 1499, sponsored by Republican state Rep. Mike Tobash, passed Monday by a 150-41 vote. It establishes a mandatory defined contribution, 401(k)-type plan for future employees. The first $50,000 of the employee's salary would be covered by the traditional defined benefit plan. Any amount of salary above the cap would be covered through the DC component.
“The plan we voted on will stop the bleeding from within the current systems by reducing the annual taxpayer contributions over time,” Mr. Tobash said in a news release. “This reform measure represents fiscal responsibility and not just a 'quick fix,' as it requires a fundamental change that helps the state meet its obligations in the future.”
Pennsylvania Gov. Tom Wolf said in a statement that the pension reform bill “will save billions of dollars while also reducing risk to the taxpayers of Pennsylvania.”
Mr. Wolf added: “I want to congratulate both Republicans and Democrats for coming together to find common ground on this issue, and I urge the Senate to move quickly to consider this important legislation.”
Pennsylvania has two public retirement systems, the $26 billion State Employees' Retirement System and the $48.5 billion Public School Employees' Retirement System, both in Harrisburg. The two plans have more than $56 billion in unfunded liabilities.
Mr. Tobash's hybrid plan was amended into Senate Bill 1071, the Senate's pension reform bill that passed Dec. 4. The bill has been sent back to the Senate for approval.