BLOG: Pension Reform Saves Taxpayers Money and Reduces Risk
By: Jeffrey Sheridan, Press Secretary
June 16, 2016
In recent months, Democrats and Republicans in Harrisburg have come together to pass legislation legalizing medical marijuana, which allows individuals access to a life-saving drug, as well as a fair funding formula, ensuring Pennsylvania was no longer one of only three states without one, and just last week, Governor Wolf signed a bi-partisan bill making the most significant reforms to our state’s liquor system in 80 years.
Earlier this week, people on both sides of the aisle in the House came together again to overwhelmingly pass a pension reform compromise that Governor Wolf praised and urged the Senate to pass. This reform will save billions of dollars while also reducing risk to the taxpayers of Pennsylvania.
More specifically, this pension reform compromise will:
Save Pennsylvania taxpayers $5 billion.
Savings for SERS are estimated at $4.05 billion and savings for PSERS are estimated at $1 billion.
Reduce the risk to Pennsylvania taxpayers by 35 percent.
This plan provides that if the systems’ investments do not meet their assumed rates of return, meaning they do not generate the amount anticipated, the employee’s contribution will increase to help make up the difference.
Establishes a 401-K style plan for future employees, similar to plans available in the private sector.
For SERS employees entering service on January 1, 2018 or after, and for PSERS employees entering service on July 1, 2018 or after, any amount of salary above $50,000 would be covered by the 401-K style, or defined contribution plan, which enables participants to have more control and to make investments that fit their needs.
In the coming weeks, Governor Wolf will continue to work with legislative leaders and members from both parties to reach agreement on a final budget that is balanced and fixes the deficit, invests more money in education and includes much-needed funding to combat Pennsylvania’s heroin crisis, our worst public health epidemic in history.
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