McGinnis says the underfunding of the State Employee Retirement System and Public School Employees’ Retirement System pensions is the most serious fiscal crisis in the history of the Commonwealth.
Supporters say House Bill 1350 would rebalance the state’s obligations to both pension funds and the general fund. It also would provide short-term budgetary relief to avoid deep cuts in core services and programs. Long-term reforms would produce an overall savings to the pension systems.
Contains no changes to current retiree pensions.
Keeps current employees and retirees in a defined benefit plan.
Respects current employees by protecting retirement benefits already accrued and allowing contribution flexibility to opt out of future benefit recalculations.
Automatically enrolls new employees, including legislators, in a defined contribution plan, similar to a 401(k), starting in 2015.
Recalculates future benefits for current employees only by capping how much of their wages and overtime are used to determine pensionable income.
Limits the amount by which the state’s employer contributions can be increased to provide short-term budgetary relief.
By enacting these reforms, school districts would realize savings of more than $1 billion over five years and nearly $140 million in 2013-14 alone.