June 12 marked a momentous victory for Pennsylvania taxpayers and pensioners. Pennsylvania’s public pension system needed structural changes so it could honor promises made to employees, retirees and taxpayers alike.
Thanks to decades of poor planning, Pennsylvania public pension plans are the tenth most underfunded in the country, containing less than 29 cents in assets for every $1 in obligations, using a risk-free rate of return. This amounts to more than $16,500 in unfunded liabilities for every resident in the state. Failure to address this looming crisis could have meant a combination of higher tax burdens and cuts in essential government services, along with possible defaulting on promises to public sector retirees.
Thankfully, Senate Bill 1 passed with bipartisan support and moves Pennsylvania solidly in the right direction. SB 1 preserves retirement security for existing and future employees, while putting in place a more fiscally sustainable benefit for new employees. The long-term financial risk of taxpayers potentially being forced to bail out the state’s underfunded pension system is now substantially diminished.
With Senate Bill 1, both public employees and taxpayers win. Please thank your lawmakers and Governor Tom Wolf for bringing substantial pension reform to Pennsylvania.