STATEMENT: KRC On the Senate Passage of the Pension Reform Bill

HARRISBURG – In the wake of a PA Senate vote to pass a pension reform bill, Keystone Research Center economist and Executive Director Stephen Herzenberg issued the following statement:

“The five-party compromise on Pennsylvania public sector pensions that passed the Pennsylvania Senate 40-9 at about 1:30 pm today is less flawed than previous ‘side-by-side’ hybrid pension plans and does preserve basic retirement security for future teachers and other state and school employees. The new actuarial note released by the Independent Fiscal Office on Sunday, however, makes clear that the compromise could cut benefits for future employees without saving the state money.

“As the proposal moves through the legislative process, lawmakers should seek to improve the plan by reducing future top-end pensions in exchange for higher benefits for lower-paid employees and should strengthen protections in the compromise that increase retirement benefits that result from contributions to individual 401(k)-style savings accounts. To begin to address Pennsylvania’s real retirement security crisis – the lack of retirement benefits in the private sector – lawmakers should also enact with any final hybrid compromise a companion bill that would give private workers with no retirement savings optional access to individual savings accounts as efficient as those made available to future state and school employees.”