HARRISBURG, Pa. (NewsRadio 1020 KDKA/AP) – Pennsylvania is moving to cut costs again in its big public pension plans, among the nation’s most troubled.
Gov. Tom Wolf signed legislation Monday that’s projected to provide a less expensive pension benefits structure for future school and state government employees beginning in 2019. It’ll also shift some risk of investment losses off taxpayers and onto the public employees of tomorrow by introducing a 401(k)-style benefit.
Gov. Wolf tells the “KDKA Morning News” that it shows they can get things done in Harrisburg and work across party lines.
Wolf says it’s fair to both state employees and taxpayers alike.
“The employee gets the ability to manager his or her own portfolio. This particular pension reform didn’t touch the benefits of existing employees so it’s fair and it takes all the risks that employers have in a defined benefit plan away from the taxpayers,” said Wolf.
It’s Pennsylvania’s second pension benefits reduction for future employees in eight years. About one-third of U.S. states already administer a mandatory or optional 401(k)-style retirement benefit for employees.
Olivia Mitchell at the University of Pennsylvania’s Pension Research Council says the bill eventually will provide some relief from pension costs. But, Mitchell says the legislation doesn’t fix the funding gap in the current pension plans.
Listen to the “KDKA Morning News” with Larry Richert and John Shumway weekdays from 5 to 9 a.m. on NewsRadio 1020 KDKA
(TM and © Copyright 2016 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2016 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)