Op-Ed: Reforming Pensions for Future Solvency

By: Senator David G. Argall (R-29)

Working with a number of other Senators, I have co-sponsored legislation to reform the state’s government employee pension systems.

Pension costs have fueled debate on this issue for years, but due to difficult budgets and stock market instability in recent years, comprehensive pension reform has become a necessity. The urgency of this issue led a number of legislators, including the Senate Majority Leader, to unite behind a single proposal that will reduce long-term costs to taxpayers.

If approved by the legislature and signed by Governor Corbett, the new defined contribution retirement system would be available to all state and public school employees hired on or after December 1, 2012, including state legislators who are elected in November and every election thereafter.

While this is not the “silver bullet” to all of the state’s budget woes, it represents a step in the right direction to help Pennsylvania reduce long-term taxpayer obligations.

The proposal would shift government employees from defined benefit plans to defined contribution plans, similar to 401(k) plans. Based on trends in the private sector, this proposal would better control the overall costs to taxpayers, especially during economic downturns.

This proposal represents a shift to remove a heavy burden from taxpayers, particularly during lean economic times when they can least afford to pay. This proposal would give employees rights to their own plan, allowing them to manage their investment strategies and integrate the investment of their retirement funds into their portfolio.

In turn, taxpayers would not be left on the hook for funding public pensions when state investment returns fail to meet projections, as we have seen in recent years.

Contact: Jon Hopcraft
(717) 787-2637
(570) 773-0891