Rep. Curt Schroder: Pension Fix Falls Short

I am disappointed that members of the Pennsylvania House of Representatives, including myself, were not permitted to vote on amendments that would have strengthened the pension reform bill that passed in the House.

We were not afforded the opportunity to vote on several amendments to House Bill 2497 that could have saved taxpayers substantial amounts of money going forward and would have enabled us to provide long-term solutions to the pension crisis. Chief among those was a measure that would have moved state employees to a defined contribution pension system, like a 401(k) plan, to replace current defined benefit plans.

I also had an amendment to move the General Assembly to a defined contribution system. Neither was considered because the actuarial notes required from the Public Employee Retirement Commission (PERC) for each amendment were not filed in time. Ironically, PERC found time to produce an actuarial note for an amendment by Democratic Appropriations Chairman Dwight Evans, despite it being filed later than some others.

Pennsylvania is looking at a multi-billion dollar unfunded liability in its pension systems. To help avert a pension crisis, it was necessary to restructure the plan for future employees. This involved changing contribution rates, extending the time it takes for a new employee to become vested, increasing the retirement age and eliminating the lump sum payout option.

For new hires, House Bill 2479 effectively rescinds benefits established under Act 9 of 2001. Act 9 increased the pension accrual rate from 2 percent to 2.5 percent and reduced the time necessary to become vested from 10 years to five. The prior levels will be restored.

I voted for this bill because it rolls back pension increases to pre-Act 9 levels for all new hires. Had I voted against the measure, I would have been voting against much needed immediate relief. It is not a perfect solution, but it will help alleviate present concerns about the coming pension spike. In the meantime, I will continue to push for defined contribution plans.

The changes contained in HB 2479 will apply to new employees of the State Employees Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS), but will not affect the retirement benefits of existing members.

HB 2497 passed by a vote of 192-6 and now goes to the state Senate for consideration.

REP. CURT SCHRODER
R-155th District
Pennsylvania House of Representatives