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Pennsylvania House of Representatives
04/23/2024 09:22 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20150&cosponId=17379
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: February 11, 2015 12:12 PM
From: Representative Mike Tobash
To: All House members
Subject: Future State and School District Employees Hybrid Retirement Plan
 
Dear colleagues,

As our state pension crisis worsens, I am introducing legislation to change the retirement plan offered by SERS and PSERS for future employees of the Commonwealth and our school districts. The proposal contains a hybrid design that reduces the Defined Benefit plan that current employees have and introduces the first mandatory Defined Contribution plan for these new employees. In developing and refining this plan, we were driven by four major goals, they include:

Lowering the Cost of Benefits provided to future employees

  • Our existing plan estimated cost for employees hired after 2010 is approximately 5% of payroll. This plan will reduce that cost to about 2.5%.
Developing savings that will be directed towards our unfunded liability

  • The savings over our current plan has been estimated to be between $11 billion and $15 billion, and far greater if we fail to earn the 7.5% investment return projections.
Shifting the risk of poor market conditions and political mismanagement away from the taxpayers

  • With the reduction in cost coupled with the Defined Contribution portion of the plan, political risk is largely eliminated.
Establishing adequate and sustainable benefits for future employees moving forward

  • The thoughtful delivery of benefits under this plan ensure that workers are guaranteed a benefit above the poverty level along with 401K type retirement savings.
The optimum way to manage ourselves out of this situation is to strike a balance and implement a multi-tier approach that is best for PA taxpayers, employees and school districts.

Please join me in this effort to reform our public sector state pensions by co-sponsoring this important measure.

Please review the Public Employees Retirement Commission report from the previous session for further information at: http://www.perc.state.pa.us/portal/server.pt/community/perc_home/2513.

Visit www.PAneedspensionreform.com for statistics and specific information about the hybrid plan.