The Governor’s Pension Proposal
The budget for fiscal year 2013-14 was presented today by the Governor and reforms for pensions were outlined. To be clear, as we have written before, when the state level reforms are mentioned the focus is on personnel covered by either SERS (state workers) or PSERS (school employees). The remaining county, local, and authority plans aren’t the subject of reform. That’s not to belittle the plan: to be sure, the unfunded liability of SERS and PSERS is a combined $41 billion.
The highlights: as with most retirement cost reform, new employees (presumably all, with no exceptions for public safety) will come under a new pension system, here a proposed defined contribution plan with employees contributing 6.25% of pay; current retirees get no new benefits, and current employees will see no change to the benefits they have accrued, however, the future benefits of current employees will have a lower multiplier and compensation reforms (overtime and Social Security caps).
This will likely be a very contentious issue as there will be much discussion over whether Constitutional language on impairing contracts has an impact on future benefits for current employees. Note that the budget proposal states that current employees can pay more into their pension to keep the multiplier from dropping.