Pennsylvania legislators this week approved reforms to their pension program for state retirees, a move that is expected to save taxpayers billions.
Most state employees and all school employees hired after Jan. 1, 2019, will get half their pension benefits from the existing defined-benefit plan and half from a new 401(a) defined-contribution benefit plan, according to Pensions & Investments. Employees in high-risk jobs like police and corrections officers will be able to retain their defined-benefit plan.
Employees hired after Jan. 1, 2019, will have the option of taking all their benefits from the 401(a) plan. Current employees will also be able to opt into the hybrid arrangement.
“This is the largest risk transfer in a public pension system of our size in the nation’s history,” Sen. Pat Browne, R-Lehigh, chairman of the Senate Appropriations Committee, said, according to the Morning Call.
The new hybrid arrangement will cut management fees by a combined $3 billion, as well as lowering the taxpayer’s pension risk by about two-thirds, according to a report from the state’s Independent Fiscal Office.
Some estimates put NC’s pension fund’s unfunded liabilities at more than $30 billion. The longer the NC legislature waits, the more painful the consequences will be.
And while they are at it, they also should address the massive $43 billion in unfunded retiree health benefits.