Pennsylvania’s Republican-controlled legislature and Democratic governor appear on the cusp of an agreement that would significantly overhaul the state pension plans, placing much of future hires’ retirement savings into 401(k) plans.
That hybrid would keep about half of workers’ pensions in the taxpayer-backed guaranteed plan. The other half would go into a corporate-style 401(k) plan that goes up and down with the market, reducing taxpayer exposure by more than 50 percent.
The changes would take effect for all workers hired from 2019 forward. They wouldn’t affect everyone. All school employees would be steered into the new hybrid, while public safety workers would be excluded.
One Republican lawmaker called the change “the largest risk transfer in a public pension system of our size in the nation’s history.”
The Morning Call reports that the new plan would reduce retirement benefits by 18 percent for new school employees and by 16 percent for most new state workers compared to current employees hired after 2010.
Clearly, this isn’t a pain-free solution. And whether it results in the massive savings politicians promise remains to be seen.
Still. it’s heartening to see bipartisan political courage in action somewhere. Let’s hope Colorado gets the message.