Senate Republicans announced a pension reform proposal late last month, now there’s a House package. The two house bills would require future state and school district employees to enroll in a defined contribution plan, similar to a 401K.

The state or school district would contribute 4% and the employee would have to contribute at least 4% of their salaries.  The plan also includes an incentive for current employees to switch. If they agree to freeze their benefits and join the new plan, the employer would contribute 7%, instead of 4%. The employee contribution would be at least 4%.

Representative Warren Kampf  (R- Montgomery/Chester) says the current defined benefit system is unsustainable. He says under his plan, the contributions would go into an account controlled by the employee. House bill 2453 applies to state employees and House Bill 2454 applies to school employees.

The two pension systems are currently under funded by about 40 billion dollars. Representative Kampf says the taxpayers he has talked to are angry and want some change.   He says this plan provides change. He adds that it says to the taxpayers “We’re smart enough now to realize we cannot continue to add more people to this system, because it only makes the problem worse.”

Representative Stephen Bloom (R-Cumberland) says it fits into the context of getting Pennsylvania back on the right track fiscally and making us a solvent state without an excessive burden on the taxpayers.

Representative Kate Harper (R-Montgomery) says something has to be done.  She says the pension “deficit” is bigger than the state’s entire budget.