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Pennsylvania House of Representatives
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House Co-Sponsorship Memoranda

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House of Representatives
Session of 2015 - 2016 Regular Session


Posted: March 4, 2016 12:45 PM
From: Representative David R. Millard
To: All House members
Subject: Pension Reform - Defined Contribution Plan
We are all aware that the Commonwealth’s pension liabilities are rapidly increasing. The effect of this growth is that pension funding is posing a growing burden on taxpayers and crowding out funding for essential government services.

I believe that the most direct way to shift pension risk away from taxpayers and to “stop the bleeding” is to move all future state and public school employees to a defined contribution plan. My proposal would place any state or public school employee who begins employment on or after January 1, 2017 or July 2017, respectively, in a 401(k)- style defined contribution plan.

Under this plan, an employee would contribute 7 percent of his or her compensation into his or her retirement account. The employee would also have the option to make additional voluntary contributions into the plan. The employer contribution rate paid into the individual employee’s retirement account would be 4 percent of payroll for most employees (with higher rates for enforcement officers, corrections officers and state police officers).

For your information, my proposal will not alter benefits for current retirees or current state and school employees. I have focused this legislation on making structural changes applicable to future employees in order to produce long term risk relief to taxpayers, rather than on changing current employee benefits and risking a court challenge.

Please consider cosponsoring this pension reform alternative.

Introduced as HB2041