Fast-moving legislation to overhaul Pennsylvania public pension benefits would yield smaller savings due to changes made over the past few days, according to an actuarial analysis released Monday.
The proposal now before the House to end the traditional pension for most future state and school employees would result in savings of about $11 billion over 30 years for the commonwealth’s two pension funds. That’s down from a projected $18 billion in long-term savings under the original proposal introduced in the state Senate.
Anticipated savings went down due to two major changes, according to the state’s Public Employee Retirement Commission. Lawmakers scrapped language that would have made some current employees pay more for retirement benefits sweetened in 2001. They also moved to exempt state police, corrections workers, and other enforcement officers from the changes.
Under the proposal, most new state and school hires would receive not the traditional pension, but a 401(k)-style retirement plan – the kind typical in the private sector. New employees would also pay into a “cash-balance” plan, designed to turn a profit for the commonwealth.
“That extra money, that profit, is going to be used to pay down the unfunded actuarial accrued liability of the existing defined benefit plan,” said Jim McAneny, PERC’s executive director.
The bill wouldn’t result in short-term savings on the state’s existing $53 billion pension debt.