Pennsylvania Gov. Wolf Proposes Pension Overhaul Amid Budget Impasse

Pennsylvania has now gone two months without a budget, and the end of the impasse isn’t in sight.

In an attempt to jump-start negotiations, Democratic Gov. Tom Wolf on Thursday proposed his biggest set of pension reforms yet: under Wolf’s plan, all new state hires making over $75,000 per year would be shepherded into a 401(k)-style plan.

Wolf has traditionally opposed any pension reforms that result in benefit cuts or shift more risk onto retirees; but he is desperately trying to bring Republicans to the negotiating table to get a new budget up-and-running.

More on the plan from Pensions & Investments:

The proposed plan includes a mandatory, 401(k)-style plan for all new employees making at least $75,000 annual income. In addition, all employees could be given the option to participate only in a defined contribution plan at their time of hire. The plan also features a risk-sharing component for all new employees. Mr. Wolf anticipates this proposed plan would reduce Wall Street management fees within the state’s two largest retirement systems by a combined $200 million annually.

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The governor’s office is continuing negotiations with state congressional Republicans to reach an agreement on a final budget.

The reforms would save the state $20 billion, according to the Governor’s office.

Photo by Governor Tom Wolf via Flickr CC License