Democratic Gov. Tom Wolf isn’t ruling out a switch to 401(k)-style retirement plans for Pennsylvania’s future state and school employees.
“I think we can actually come up with a pension plan that’s fair to employees and that meets the concerns that have been expressed by taxpayers,” said Wolf when asked if he could sign such a proposal.
After nine days of review, Wolf vetoed a GOP-backed bill Thursday to overhaul the state’s public retirement benefits. The measure’s biggest change would be for new hires of the state and public schools. Instead of a guaranteed pension payout upon retirement, they would invest employee and employer contributions into a 401(k)-style savings plan.
Rather than detailing his position on the proposed shift to a 401(k)-style system, Wolf offered a few other reasons for rejecting the Republicans’ pension bill. He said one piece of it would have violated federal tax law. He also wants to see immediate savings to help school districts facing big pension bills. For that short-term relief, Wolf has proposed borrowing money.
Republicans tend to support the switch to 401(k)-style plans, which dominate the private sector. Democrats say such plans don’t provide sufficient retirement security and that retirees would be forced to rely on social safety net programs in their old age.
Labor unions applauded the governor’s veto Thursday. Their glee was not lost on Republicans.
“He seems to be siding with the public employee union leaders and not the public,” said Sen. Dave Argall, R-Schuylkill, of the governor.
Wolf did take issue with the retirement benefits included in the Republican bill, arguing they had been cut too drastically.
“They’re not going to have much of a retirement,” said Wolf of future hires. “It’s not going to be fair to them.”
But he stopped short of announcing his opposition to all 401(k)-style retirement plans.
The House GOP leader has said negotiations with Wolf have been more productive on pension policy than any other item.
“We’re getting closer,” Wolf said. “I vetoed it, not because this is just flat-out, all wrong, but because I think we need some more work and I think we can do it.”