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Pa. House approves major changes to public pensions

HARRISBURG - The state House voted overwhelmingly Wednesday to approve significant changes to the state's two large public-sector pension plans.

HARRISBURG - The state House voted overwhelmingly Wednesday to approve significant changes to the state's two large public-sector pension plans.

The 192-6 vote, taken without floor debate, sent to the Senate a bill that would delay and smooth out a looming jump in costs to taxpayers and reduce some benefits for newly hired state workers, teachers, and other school employees.

For those employees, pensions would be 20 percent smaller than they now are, unless employees opt to have more money taken out of their paychecks. The practice that lets retirees withdraw their own contributions plus interest upon retirement would be eliminated. The standard retirement age would increase to 65, and it would take 10 years, not five, to be vested.

Senate Majority Leader Dominic Pileggi (R., Delaware) called the legislation "a good first step" in cutting the costs of retirement benefits, but noted that the new financial structure designed to push back the spike in costs would cost about $52 billion over 30 years.

"It's very good, I think, on the reform side, but the cost of deferral is something we need to take a look at," Pileggi said.

Pileggi spokesman Eric Arneson said it was possible that the Senate could act on the bill before the summer recess but added that leaders were reviewing "many details" in the bill.

For the Public School Employees Retirement System, the lower benefits would apply to anyone hired after June 30, 2011. For the State Employees Retirement System, the benefits would involve workers hired after Dec. 31, 2010.

The legislation is designed to address a sharp increase in the costs to taxpayers expected in 2012. The bill would limit the amount of a single year's increase in costs to governments and school districts, gradually increasing to a cap of 4.5 percent of payroll.

There would also be higher minimum payments. After 2014, the state and school boards would not be allowed to pay into the system less than the so-called normal cost to maintain benefits.

Gov. Rendell's spokesman said that the governor was generally supportive of the direction taken by the House bill but that he would not express a firm position until reviewing the bill in detail.