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Pennsylvania House of Representatives
http://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20130&cosponId=10879%20
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MEMORANDUM

Posted: January 13, 2013 02:57 PM
From: Representative Scott Petri
To: All House members
Subject: SERS and PSERS Optional Defined Contribution Plans (Former HB 551 and HB 552)
 
 I will be reintroducing legislation that will allow future state and school employees to opt into a defined contribution retirement program in lieu of becoming a member of the State Employees’ Retirement System’s (SERS’) or Public School Employees’ Retirement System (PSERS) defined benefit program.
 
I believe that these proposals can lead to a “win-win situation” for state and school employees and taxpayers, who currently provide financial support to SERS and PSERS.  State and school employees will be given another retirement option, which will allow them to take more of an active role in investing for their retirement.  Over the long term, the defined contribution program created by this proposal may serve to reduce future retirement costs.
 
Briefly, my legislation would do the following: 
  • Charge the SERS/PSERS boards with administering optional defined contribution plan for state/school employees.  The boards will oversee the selection of institutions that will provide investment vehicles to program participants.  The boards will also serve as trustees of the participants’ funds.
  • Provide for employer contributions on behalf of program participants, at a rate of 6 percent of payroll;
  • Provide for employee contributions at a rate of 6 percent of compensation;
  • Require the boards to develop a comprehensive education program, designed to full inform participants regarding their various investment options, and investment strategies;
  • Allow participants to periodically review and change their investment options; and
  • Provide a federal tax-deferred benefit, in accordance with the Internal Revenue Code.
 I believe that public employers must begin to examine and consider defined contribution plans as a viable retirement alternative for their employees.  Public defined benefit programs across the nation are faced with substantial unfunded liabilities.  A 2010 Pew Center on the States study reported an aggregate unfunded liability among statewide public employee pension systems of over $452 billion. The time has come to take another step toward pension benefit and funding reforms here in Pennsylvania.


Document #1

Introduced as HB240

Description: Former HB 551: PSERS Optional Defined Contribution Plan

Previous co-sponsors: CALTAGIRONE , D. COSTA, GABLER, MURT , RAPP , ROAE , TRUITT, YOUNGBLOOD and SANTARSIERO
 

Document #2

Introduced as HB242

Description: Former HB 552: SERS Optional Defined Contribution Plan

Previous co-sponsors: CALTAGIRONE , D. COSTA, GABLER, MURT , RAPP , ROAE  , TRUITT and SANTARSIERO