Corbett unveils pension-reform plan
Gov. Tom Corbett announced a pension-reform plan.
Pennsylvania Gov. Tom Corbettannounced Tuesday a pension-reform plan to save upward of $2 billion over the next five years.
Corbett’s plan includes moving new employees hired after July 15, 2015, to a defined contribution plan for both the State Employees’ Retirement System and the Public School Employees Retirement System, making changes to current employees’ pension plans and capping annual contributions from 4.5 percent to 2.25 percent.
There are no changes for retirees or those benefits for current employees through what it said was “the effective date of the plan.”
“This is a comprehensive approach that will require unprecedented collaboration among not only the administration and the Legislature, but SERS and PSERS and the unions representing state and school employees as well,” Corbett said in a prepared statement. “But we must work together, as we have to take action now.”
The state said the changes in employer contributions alone would save the commonwealth almost $2 billion over the next five years and could save school districts $1 billion during the same period.
Pensionable compensation would be 110 percent of the average salary over four years and capped at $113,700 for 2013, according to Corbett’s plan. The formula multiplier would be reduced 0.5 percent for anything over 2 percent other than those who the state said “bought up” to a higher multiplier.
The defined contribution plan for new employees would be a 401(a) defined plan that would require state employees to contribute 6.25 percent of their salary and public school employees to contribute 7.5 percent.
Corbett unveils pension-reform plan – Pittsburgh Business Times.