HARRISBURG, PA – State Rep. John Siptroth, D-Monroe/Pike, this week voted for bipartisan legislation (H.B. 2497) that passed the House of Representatives to address Pennsylvania’s pension crisis.
“This bill will remedy the problems caused by the 2001 pension grab, which was a terrible miscalculation,” Siptroth said. “This will cut benefits and ensure a system that will not lead to a spike in state tax increases or local property tax increases. Without this fix, Pennsylvania taxpayers would face billions of dollars in increased taxes.”
The state’s retirement systems, the Public School Employees Retirement System and the State Employees Retirement System, are underfunded due to a combination of investment downturns and the global economic crisis of 2008, as well as increased benefits enacted in 2001 and a cost-of-living adjustment for retired employees.
Under the plan, the increased costs would be capped by a set percentage that increases each year for four years up to 4.5 percent. The increase for subsequent years would remain at 4.5 percent until such a time as the increased costs borne by the state and school districts are less than what is required.
The bill also would set new rules for employees who join the retirement systems after July 1, 2011 for PSERS or Jan. 1, 2011 for SERS, including an increased vesting period from five years to 10 years, an increased retirement age – to age 65 – for both retirement systems and an increase in employee contribution.
“This legislation is critical for more predictable state and school district budgeting in the coming years, but I believe more needs to be done to protect local taxpayers further down the road,” Siptroth said.
Siptroth has co-sponsored legislation (H.B. 2559) that would create a Public Employee Pension Commission to prepare within six months a comprehensive report of recommendations for long-term changes to pension systems to ensure their fiscal solvency.