In what has been described as an overwhelming bipartisan vote, the state house voted 143-53 to approve a pension reform bill.
The bill would mitigate the state’s risk in its pension system by enrolling all new state employees in a hybrid traditional pension and 401k style product. Such products are known as side-by-side hybrid plans.
New employees could also opt to enroll entirely in a 401k plan.
It would not affect current employees or retirees. However, current employees could enroll in the new system if they choose.
Monday, the Senate passed its version of the bill. Gov. Tom Wolf has already said he will sign the bill.
Republicans have said the plan will stop the losses in the state pension plans and should save taxpayers more than $5 billion. An additional savings of up to $3 billion also have been projected because of reduced costs and fees.
Mike Schlossberg, D-Allentown, said the passage of the bill is significant and will go a long way to improving the state’s pension system.
“I don’t want to get people’s hopes up, though,” he said. “The biggest problem is still the unfunded liability.”
According to the Commonwealth Foundation, the state’s unfunded liability in its pension system jumped from $7.6 billion in 2001 to $71 billion in 2016.
“In order to address, that you have to fund that liability, and that takes political courage,” Schlossberg said.
House Majority Whip Bryan Cutler, R-Lancaster, said in a statement that he knows it’s not the perfect bill, but a “strong bill that receives a vote is far better than a perfect bill that may never exist.”
The reform will affect new state workers, teachers, judges and members of the General Assembly.