Plan by State Representatives Mike Tobash (R Schuylkill/Berks) Mike - - PowerPoint PPT Presentation
Plan by State Representatives Mike Tobash (R Schuylkill/Berks) Mike Tobash (R Schuylkill/Berks) Warren Kampf (Chester/Montgomery) An Overview of the Problem Pennsylvania faces a nearly $50 billion pension debt that will take decades to
Pennsylvania faces a nearly $50 billion pension debt
This massive debt was caused by:
U d f di
Underfunding. Declines in the markets. Increases in benefits Increases in benefits.
Proactively working to protect current employee benefits
and to eliminate the possibility they will be in jeopardy in the future.
60 000 jobs could be at risk 60,000 jobs could be at risk. Increase in employer contributions from $3.4 billion to $6.6
billi billion.
The state’s bond rating is in jeopardy of being lowered
The state s bond rating is in jeopardy of being lowered again.
Adopt a pension reform plan that seeks to reduce the
Rep Tobash is sponsoring an amendment to Rep Rep. Tobash is sponsoring an amendment to Rep.
New employees entering the state systems would be
( ) enrolled in a combination of 401(k) type and traditional pension (hybrid) plan.
Addresses STEP ONE of meaningful pension reform
Over a 30 year projection period this plan is estimated Over a 30‐year projection period, this plan is estimated
Defined Benefit (DB) Defined Contribution (DC) Defined Benefit (DB) Defined Contribution (DC)
2 percent accrual rate.
Employee contribution of 6 percent.
Lifetime final average salary, not to exceed
Employee contribution of 1 percent and employer contribution of 0.5 percent on all compensation up to $50,000. Lifetime final average salary, not to exceed $50,000 (indexed 1 percent annually).
DB is fully earned after 25 years of service.
Participants are vested after 10 years of service.
DB t t b ll t d i t compensation up to $50,000.
Employee contribution of 7 percent and employer contribution of 4 percent on all compensation more than $50,001.
Employee contributions vest immediately and three‐year vesting of employer
DB payments cannot be collected prior to age 65 without penalty.
DB payments cannot be collected prior to age 60 without penalty for those not covered by Social Security. N diff l f i Th l and three year vesting of employer contributions.
No loans or in‐service distributions from the DC plan.
Portability, withdrawal penalties, etc., per IRS rules
No different classes of service. The only distinction between members and levels of benefits is if the position is covered by Social Security. IRS rules.
Additional DC employer contribution of 6 percent for those employees not covered by Social Security.
current employees have earned.
plan.
Simply put, benefits of current employees will NOT
Rules regarding maternity or sick leave, vacation,
The ONLY way a current employee’s plan would not
Under the new plan, all new employees entering the
Teachers, legislators, judges, clerks, etc., will all be in
This plan has been developed through testimony held
This is not the work of any one person, agency, or
Email: MTobash@PAHouseGOP.com
Capitol Office
Email: WKampf@PAHouseGOP.com
Capitol Office Capitol Office 4B East Wing PO Box 202125 Harrisburg, PA 17120‐2125 Phone: 717‐260‐6148 Capitol Office 422 Irvis Building PO Box 202157 Harrisburg, PA 17120‐2125 Phone: 717‐260‐6166
District Office 988 East Main Street Suite A Schuylkill Haven PA 17972
District Office 42 East Lancaster Avenue, Unit A Paoli, PA 19301 Phone: 610‐251‐2876 Schuylkill Haven, PA 17972 Phone: 570‐385‐8235 Phone: 610‐251‐2876