Senate passes pension reform on to House; some say it doesn’t go far enough

HARRISBURG, Pa. (WHTM) – It is called Senate Bill 1 because it’s been a number one priority to fix the state’s broken pension system for years.

Pensions have been budget busters that bleed more and more billions from taxpayers to fund state and school retirees. Majority Leader Jake Corman (R-Centre) is the bill’s prime sponsor and likened the pension crisis to an illness.

“You have a cold and you’re sick and the doctor prescribes medicine,” Corman began his analogy. “The medicine’s not particularly tasty, but you take it because ultimately you’re gonna get better. Well, we’re sick and nobody’s taking medicine. Nobody’s trying to fix the problem that got us here.”

Senate Bill 1 would only apply to state and school district employees hired after January 2019. Current retirees and workers in the pension system would not be affected.

Those hired after 2019 would basically have three retirement options. The first two are hybrid plans; that is, half defined benefit and half defined contribution. The third option would be all defined contribution, or a 401(k)-style plan. All three options would reduce the future burden on future taxpayers.

“It shifts risk which I think is the hugest thing,” said Sen. Mike Regan (R-Cumberland/York). “We’ve been talking about this for a long time. I don’t know that you were ever gonna get a bill that was perfect for everybody. I think we found a sweet spot.”

But Senator Scott Wagner (R-York) is sour on the plan.

“This is dancing around the campfire and not solving the problem,” said Wagner, who is also running for governor.

Wagner says SB 1 doesn’t fix the current problem or reduce the current debt, hovering around $70 billion. He supports putting all new hires into an entirely defined contribution plan.

“People are saying listen, Scott, this is 50 percent of something and that’s better than a 100 percent of nothing,” Wagner said. “I don’t agree.”

Corman concedes that he, too, prefers to put all new hires into a defined contribution plan.

“The governor wouldn’t sign it and I don’t know that the House would pass it,” Corman said. “It’s the art of what you can get accomplished.”

Pennsylvania State Police and other law enforcement, including Capitol police, would be exempt from the new plan and would be placed in the current retirement system. Future lawmakers would be required to join the new plan, but current lawmakers would be able to choose whether to stay in their current plans or enroll in the new one.

Conservative groups and business leaders, frustrated by years of inaction, applauded the legislature and urged quick passage. To many, something is better than nothing.

“The important part is we can’t make the perfect the enemy of the good,” said Kevin Shivers, the Pennsylvania director of NFIB, a small business advocacy group. “We need to start moving forward and tackling this issue now. This bill is progress.”

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