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Pension Reforms Fall Short
The House-approved plan to contribution/defined benefit plan for Both retirement systems are
reform the state’s ailing pension future employees. funded by employee and employer
systems is a good start. I supported Allow federal stimulus money contributions and investment earn-
several amendments that would pro- not targeted to a specific program to ings. Lagging employer contributions
vide for real reform. The plan reverts cover PSERS’ unfunded liability; and a down economy are largely
back to the pension formula that was Minimum contribution rates to responsible for the pension crisis that
in place in 2000 including increased eliminate future spikes in contribution will require an estimated 30 percent
vesting periods, increased retirement rates. increase in employer contributions in
ages, and caps on increases to save Increase PSERS employer con- 2012, if not addressed by legislative
taxpayers money. tribution rate to allow school districts action.
I supported amendments by my to pay off shortfalls before the pro- To help avert a crisis, it was nec-
Republican colleagues to House jected rate spike. essary to restructure the plan for
Bill 2497 that would have further Removal of the cap on school future employees by changing con-
softened the financial blow that is district reserve balances for future tribution rates, extending the time it
coming in 2012 when the state’s pension contributions, permitting takes for a new employee to become
contribution to the plans is scheduled school districts to contribute more vested, increasing the retirement age
to rise sharply, but a vote on these and taxpayers to save in the future. and eliminating the lump sum payout
amendments was blocked. option.
While we approved major reforms Pennsylvania is currently facing a The pension system will look dif-
to the state pension systems, I want- multi-billion dollar unfunded liability ferent for future employees. Changes
ed those reforms to go much further. in its pension systems. The changes were necessary to smooth out what
Cost-saving amendments that were contained in HB 2497 will not affect would have been a certain fiscal di-
not considered would: retirement benefits for existing SERS saster. It is unfortunate we were not
or PSERS members. Instead, they permitted to do more.
Establish a statewide defined will apply to new hires. The plan will The pension bill passed by a wide
contribution plan for future state and help address future expenses and margin in the House and now rests
local public employees, including will enable the state and school dis- with the Senate where I am hopeful
public school teachers. tricts to better manage their annual it will be further amended to include
Convert PSERS to a defined pension obligations. necessary reforms.