HARRISBURG, Pa., June 19, 2013 /PRNewswire-USNewswire/ -- Pennsylvania AFL-CIO President Rick Bloomingdale today urged the members of the State Senate to reject Senator Michael Brubaker's amended pension legislation which would switch future employees from the current defined benefit pensions to a more costly and inferior defined contribution plan. Senator Brubaker's pension legislation was amended by the Senate Finance Committee today. He is the Chair of the Committee.
Senator Brubaker's amended bill removes several major aspects of the Governor's pension proposal, but it keeps the defined contribution, 401(k) type, of pension, for future employees, which fails to provide retirement security and is more costly to taxpayers.
Under the amended bill, the defined contribution pension would apply to school teachers and employees of school districts hired after July 1, 2015, and State employees hired after January 1, 2015. The amendments also remove the proposal to cut future accrued benefits of current employees and restores the taxpayers' contribution levels that were lower under the Governor's plan.
"Substituting a defined contribution 401(k) type of plan for new hires not only threatens the retirement security of current and future workers, it also adds $40 billion in additional pension debt as reported by Buck Consultants last week," Pennsylvania AFL-CIO President Bloomingdale said.
"Taxpayers will also be paying more for the added costs of human services as future retirees will not receive adequate pension benefits. 401(k) pensions fail to provide a decent pension benefit. They expose workers to high risks of market fluctuations and subject workers to high fees and costs charged by individual retirement account managers," Bloomingdale warned.
"We also urge the members of the Senate to reject this bill on the basis of what the record has been in other states. In 43 other states which have modified their pension systems between 2009 and 2012 not one state has substituted a 401(k) type of plan for their defined benefit pension plans. Other states have determined that a switch would be bad news for taxpayers, for employees and for employers seeking to attract and retain qualified employees. Let's learn from the experiences and lessons of these other states. It's time to set aside this ill-conceived proposal and let the real pension reforms of Act 120 of 2010 work for Pennsylvania," Bloomingdale concluded.
SOURCE Pennsylvania AFL-CIO