Issue Position: On Pension Reform

Issue Position

Without reform, the problem of pensions is bound to become Pennsylvania's next crisis issue. 15 years ago industries moved away from defined benefit plans toward defined contribution plans. I believe government needs to follow this lead and move toward a defined contribution plan and 401(k) and 403(b) plans. Part of what makes these plans successful is that employees own them and decide how aggressively they want to invest. This ownership and responsibility allows employees to be directly involved in planning for their own retirement. In order to bring similar reform to government pensions, new government employees need to be given this new pension plan upon employment, and current employees need to be phased in.

Representative Grell's bill, which proposes to borrow up to $9 billion dollars to pay toward the $45 billion dollar unfunded liability to the state and public school employees' retirement fund, has been getting some traction. If this bill were to be voted into effect, there would be 4 percent minimum investment guarantees, 4 percent employer (tax payer) contributions, and up to 7 percent employee contributions. Even labor unions are warming up to this plan more than anything else that has been presented as a fix. This bill in its present form would still take a long time to get on track to make the pension plan whole. This bill deserves to be a priority for legislators this year. Pension reform cannot wait, and I will be closely following the Grell bill and any other reform movement.

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