SAN JOSE, Calif., June 12, 2017—The Retirement Security Initiative (RSI) today called reform to Pennsylvania’s Public School Employees’ Retirement System (PSERS) and State Employees’ Retirement System (SERS) a huge win for the state’s public employees and taxpayers. The legislation, SB 1, which was passed by the Pennsylvania General Assembly last week on strong, bipartisan votes, was signed into law today by Governor Tom Wolf.
“RSI congratulates the Pennsylvania legislature and Gov. Wolf for accomplishing meaningful pension reform that will secure the retirement futures of public employees and retirees, while saving the state billions of dollars,” said RSI CEO Pete Constant. “For more than a year, RSI diligently worked alongside Pennsylvania legislative members and stakeholders toward this significant policy achievement and is proud of our collaborative effort to get pension reform over the finish line. It’s a job well done and demonstrates to other state and city governments that meaningful pension reform is possible.”
Under the reform, Pennsylvania’s employees and retirees, whose retirement futures were uncertain, will now be placed on a path to a secure retirement. The new law reforms PSERS and SERS from a defined benefit structure to a system in which future public employees have a choice between three retirement savings options, including two defined benefit/defined contribution (DB/DC) hybrid retirement plans and a defined contribution (DC) retirement plan. Importantly, with the new structure in place, employees and retirees will be able to count on fair, sustainable and predictable benefits.
Further, the reform is expected to save Pennsylvania up to $1.4 billion and is also expected to reduce the state’s unfunded pension liability, which currently is more than $75 billion, by up to $4.2 billion. Without reform the pension debt would have continued to increase, resulting in tremendous budget challenges for the state, while threatening public workers and retirees with unfunded retirement benefits.
“RSI believes that all workers deserve safe and secure futures and retirement plans should place employees on a path to a secure retirement, regardless of tenure,” said Constant. “Pennsylvania’s pension reform package achieves that goal.”