Politicians in Pennsylvania have been trying to gut worker pensions for years. In this state-focused series at Defined Benefit, we’re going to give you the background on this battle to protect retirement security in Pennsylvania.
Let’s begin with some history. As we’ve seen in many states, Pennsylvania’s public pensions were deliberately underfunded by short-sighted politicians for decades. When the Great Recession hit, the combination of irresponsible underfunding and a market downturn resulted in funding problems for the Pennsylvania systems. In 2010, a bipartisan legislature passed Act 120, legislation that will responsibly close the funding gap and put the state on the path to a healthy pension funding level. Even after workers sacrificed for circumstances that weren’t their fault, former Governor Tom Corbett proposed transitioning from a defined benefit pension to a defined contribution 401(k)-style plan in 2013. At the time, the Republican-controlled legislature rejected this plan, due to its immense cost and questionable constitutionality. Now, however, legislative leaders have revived Governor Corbett’s failed plan.
This year, the Republican-controlled state legislature hurriedly passed Senate Bill 1, a bill that strongly resembles Governor Corbett’s dubious plan. Fortunately, Governor Tom Wolf vetoed this legislation. Now, however, Governor Wolf and the legislature are locked in a battle over the state budget and pensions are one of many issues at play in resolving the standoff. Recently, the Keystone Research Center released a new report on Senate Bill 1, which finds that younger workers in particular would be harmed by the poor design of SB1’s “reforms.”
Pennsylvania’s workers have already sacrificed in order to preserve their pensions. Let’s hope that the retirement security of hardworking Pennsylvanians doesn’t become a political bargaining chip in the battles of Harrisburg politicians.