In Pennsylvania, Bill to Shift New Public Safety Hires to 401(k) Gains Momentum


A Pennsylvania Senate panel on Wednesday approved a bill that would allow municipalities to shift new police and firefighter hires into a 401(k) system.

The measure is designed to help the state’s municipalities, who are dealing with rising, massive pension costs. But labor groups say this latest proposal eases costs at the expense of the retirement security of police and fireman.

From the Citizen’s Voice:

The measure cleared the Republican-controlled Finance Committee by a mainly party-line vote.

The Senate bill gives municipalities an option of putting those new public safety hires under a defined-contribution benefit plan rather than a traditional defined-benefit plan.

In a defined-contribution plan like a 401(k), workers designate a portion of their current salaries to be paid into an investment account. In a traditional defined-benefit plan, workers typically negotiate deferred compensation in lieu of current salary or raises, and the amount is paid directly by the employer into a pension fund.

The Senate bill would keep existing pension benefits for current public safety employees in place. Pension benefits under the bill wouldn’t be subject to the collective bargaining process for paid police and firefighters under Act 111.

What are the chances the bill will become law? The odds are long, because many Democrats oppose the bill, including the most important one: Gov. Tom Wolf, who is likely to veto any measure that aims to curb benefits.


Photo credit: “Flag-map of Pennsylvania” by Niagara – Own work from File:Flag of Pennsylvania.svg and File:USA Pennsylvania location map.svgThis vector image was created with Inkscape. Licensed under CC BY-SA 3.0 via Wikimedia Commons

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