An iceberg on the horizon

Here in the Keystone State, taxpayers are on the hook for about $1.7 billion to pensions next year, a figure that will climb to more than $4 billion by 2016. In the face of these exploding costs, a group of GOP senators have proposed legislation that would move all employees hired after December 1, into a new pension plan that would operate like a 401(k) plan instead of the existing defined-benefit system, which provides pensions on a formula of years worked, highest salary and a multiplier based on position.

To give credit where credit is due: Senate Majority Leader Dominic Pileggi, R-Delaware County, will sponsor the legislation with Senate Majority Whip Pat Browne, R-Lehigh County; Sen. Jake Corman, R-Centre County, and Sen. Mike Brubaker, R-Lancaster County.

Governor Corbett himself has identified pension reform as an important policy goal within the next year.

These plan design changes, affecting the state's two largest pension systems (PSERS and SERS), are an important first-step towards implementing a long-overdue comprehensive pension reform plan. Senator Jake Corman's also made reference recently at the PA Press Club luncheon to a goal of modifying unearned benefits for participants in these two plans. This would also reduce future liabilities.

Pennsylvania also needs funding reforms with a goal of avoiding transferring costs to the next generation of employees and taxpayers. Finally, with over 3,000 DB and DC plans in the Commonwealth of Pennsylvania, a goal of consolidating these plans makes good policy sense.

Here's to hoping that something gets done this year.

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An iceberg on the horizon

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