HARRISBURG, Pa. (AP) – Pennsylvania is moving to cut costs again in its big public pension plans, among the nation’s most troubled.
Democratic Gov. Tom Wolf signed legislation Monday that’s projected to provide a less expensive pension benefits structure for future school and state government employees beginning in 2019. It’ll also shift some risk of investment losses off taxpayers and onto the public employees of tomorrow by introducing a 401(k)-style benefit.
It’s Pennsylvania’s second pension benefits reduction for future employees in eight years. About one-third of U.S. states already administer a mandatory or optional 401(k)-style retirement benefit for employees.
Olivia Mitchell at the University of Pennsylvania’s Pension Research Council says the bill eventually will provide some relief from pension costs. But, Mitchell says the legislation doesn’t fix the funding gap in the current pension plans.