Commonwealth Foundation is the best place to get information you can trust and that will tell you the economic impact of what's going on in Harrisburg. Check to see how your House Representative voted at the link below. According to CF the Pension Bill approved in the House and sent on to Governor Rendell to sign "will delay payments into the pension fund. What this means is that, compared to current law, taxpayers will now pay $12 billion less over the next 10 years, then $19 billion MORE over the next 14. This is essentially pushing the costs onto the next generation. And this depends on 8% return on invesment, which is a rosy scenario"
This is like not paying your credit card bill for years!
See how your legislator voted.
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In the 60th District where I live, Rep Jeff Pyle voted yes and sent out an email to keep his constituents informed, in which he writes:
“I was pleased the speaker called the House back into session so that we could get this bill to the governor’s desk,” Pyle said. “Without changes to the current pension systems, taxpayers throughout the 60th District were faced with significant increases in their school property tax bills to help school districts fund investment losses. State government must take actions that protect taxpayers and this bill accomplishes this goal.”
Under House Bill 2497, changes that would be made to the pension systems include:
• Elimination of the lump sum option, which permits retiring employees to withdraw all of their contributions, while receiving a monthly benefit.
• Raises the retirement age from 60 to 65 for state employees and from 62 to 65 for school employees.
• Increases the vesting period from five years to 10 years.
• Reduces the benefit multiplier from 2.5 percent to 2 percent and from 3 percent to 2 percent for lawmakers, while maintaining the employee contribution rate of 6.25 percent for state employees and 7.5 percent for school employees.
• Capping the retirement benefit under the new plan at the member’s pre-retirement salary, regardless of how many years of service.
• Reduces the liabilities amortization period from 30 years to 24 years.
• Creation of a “shared risk” provision, which would shift investment losses to the employee instead of solely being borne by the taxpayer. The employee’s contribution would be adjusted periodically to reflect any poor investment performance by the fund.
“The changes included in this legislation will only apply to new state and school district employees. Contrary to many reports, those who are currently employed or retired will not be affected in any way,” Pyle said. “These changes will help the long-term health of the pension system to ensure that both funds are able to meet their future obligations.”
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Fortunately Governor-elect Tom Corbett is said to be in favor of a 401-K type solution and I see that the Republican leadership, Mike Turzai and Sam Smith, both voted NO on this bill, which is a good sign. I just hope that a lot of money is not wasted in implementing this legislation after Governor Rendell signs it and before real pension reform measures can be enacted! I would say that letters of appreciation to the 31 representatives who did vote NO on this bill would be a good idea!
