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Pennsylvania House of Representatives
07/26/2024 05:40 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?SPick=20230&chamber=H&cosponId=42840
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House of Representatives
Session of 2023 - 2024 Regular Session

MEMORANDUM

Posted: June 10, 2024 03:47 PM
From: Representative John A. Schlegel
To: All House members
Subject: Amending the Pennsylvania County Pension Law
 
Dear Colleagues,
I am writing to seek your support and co-sponsorship for an important piece of legislation that I will be introducing to amend the Pennsylvania County Pension Law. This bill will provide counties the option to offer defined contribution plans in addition to the currently available defined benefit plans.
Background:
Under the existing county pension system, counties are limited to offering defined benefit plans to their employees. While defined benefit plans provide a guaranteed payout at retirement based on a predetermined formula, they can place a significant financial burden on counties due to the necessity of ensuring sufficient funding to meet future obligations.
Proposed Changes:
The proposed legislation aims to amend the County Pension Law by allowing counties the flexibility to offer defined contribution plans as an alternative to the traditional defined benefit plans. Key provisions of the bill include:
  1. Optional Defined Contribution Plans: Counties may establish defined contribution plans, which would operate similarly to 401(k) plans in the private sector, providing employees with individual retirement accounts funded by employer and employee contributions.
  2. Retention of Defined Benefit Plans: Current employees and retirees who are already enrolled in defined benefit plans will retain their plans and benefits without any changes. The introduction of defined contribution plans will not affect their existing entitlements.
  3. Employee Choice: New employees and those currently in defined benefit plans will have the option to choose between the new defined contribution plan and the traditional defined benefit plan based on their individual retirement planning needs.
Rationale:
This legislative change is crucial for several reasons:
  • Financial Sustainability: Defined contribution plans can help mitigate the long-term financial risks and liabilities that counties face with defined benefit plans, ensuring a more sustainable and manageable fiscal environment.
  • Attracting Talent: Offering a defined contribution plan provides employees with flexibility and portability of retirement savings, which can be particularly attractive to younger workers and those who value control over their retirement investments.
  • Choice and Flexibility: By allowing employees to choose between the two types of plans, we empower them to make decisions that best suit their financial goals and career plans.
Conclusion:
By cosponsoring this bill, you will be supporting a forward-thinking approach to public employee retirement benefits that balances fiscal responsibility with the need to attract and retain a talented workforce. I encourage you to join me in this effort to modernize our county pension system and provide greater flexibility and security for our employees.
Thank you for your consideration and support. Should you have any questions or require further information, please do not hesitate to contact my office.
 


Introduced as HB2507