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House addresses state pension crisis

HARRISBURG, June 18 – State Rep. Babette Josephs, D-Phila., said the state House passed legislation this week that would address the Commonwealth's potentially crippling pension crisis.

The bill (H.B. 2497) would make changes to SERS and PSERS, the state's State Employee and Public School Employee retirement systems, respectively, which are in jeopardy due to the current economic downturn, increasing benefits and a cost-of-living adjustment for retired employees.

"This bill does two things," Josephs said. "It tempers the dramatic spike in pension costs faced by the state and school districts and it creates new rules for future employees to stabilize the finances of the pension funds to ensure their viability in the future."

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.

It 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 a change in employee contributions.

This bill now moves to the state Senate for consideration.

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