US

Pennsylvania Governor Signs Pension Reform Bill

Reuters

Aislinn Murphy Assistant Managing Editor
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Pennsylvania Gov. Tom Wolf signed pension reform bill into law Monday.

The law, which takes effect in 2019, overhauls the old pension system for future state employees and public school teachers, replacing the taxpayer-funded system with three options that rely on to various extents on 401(k)-style plans, according to the Philadelphia Inquirer. Current state employees may opt into the new system but are not required to do so.

Pennsylvania lawmakers hope the new pension system will provide a less expensive way to get people their benefits. The current pension system created a $62 billion debt for Pennsylvania’s funds for state works and public school teachers. It will also shift the market risk from taxpayers to public employees.

“This is real and meaningful pension reform,” Wolf said. “This is a win for taxpayers.”

Barry Shutt of Grandparents For Pension Reform in PA and other pension reform advocates remain skeptical, reports the Philadelphia Inquirer. For the bill to be successful, Pennsylvania must make steps to pay off the massive debt its old pension system created.

“If you don’t start paying at least $2 billion more per year on that pension debt, it’s not going to get paid off,” he said.

Despite the concerns, Pennsylvania lawmakers believe this pension reform bill will close the gap between promised benefits and being able to meet those obligations.