Senators of Senate Appropriations Committee voted to go for amending Senate Bill 1. The bill deals with retirement options applicable for the Pennsylvania state employees. The vote was 18 in favor to eight against. According to top Jake Corman of the GOP and the Senate Majority Leader, this will affect all commonwealth employees, from court systems to the PennDOT to the administrative legislature. He said the important part of this bill is to transfer risk away from taxpayers. The tax payers, at present, have witnessed their contribution as employers of the two systems balloon up from 2007 era $600 million to surpass $3 billion in 2017.
The issue in question is an extremely pricey one. As per the bill, the retirement systems suffer from a shortage of funds amounting to about $60 billion. This is spread all over the state. It means that taxpayers will suffer from increased taxes. School districts across Pennsylvania state will also suffer. John Callahan, the Assistant Executive Director of Pennsylvania School Board Association, said that the bill incorporates longer term changes within system. The changes will help to considerably stem the liability and also assist in cutting the liability of school districts for a foreseeable future. In case the bill gets all the signs and is made into a law, then the pension plans made as a result will be comparable to the 401(k) plans.
Supporters of the new system hold the opinion that this kind of overhaul was long overdue. They believe that it will assist the Commonwealth through the generation of savings for state in future.
Impact and opposition
There will be no impact of such a step on the present retirees and also the state employees who are due to retire in the future. They will only be impacted if they opt into this plan. However, new recruits of the state and public-school teachers beginning in 2019 will select from three kinds of 401(k) kind plans.
Senator Vincent Hughes of the Democratic Party, and serving the seventh district, thinks the change is for the worse. He opined that when the plans are moved towards newer systems, the kind of systems which are being discussed, a huge amount of pressure is exerted on people to manage their own retirement. He added that research has shown that most people do not have the capacity to tackle their personal retirement schemes.