Pa. House Approves Pension Boost for Oldest Retired Teachers and State Workers

The state House has once more approved a bill aimed at providing a cost-of-living increase to approximately 59,000 retired educators and government workers whose pension payments have remained unchanged since 2002.

This problem stems from several peculiarities within the State Employees Retirement System (SERS) and the Pennsylvania School Employee Retirement System (PSERS). These two pension funds ensure retirement benefits for state government employees and public school educators, respectively.

In 2001, Pennsylvania enacted Act 9, providing substantial continuous enhancements to the benefits for present public sector workers—and this measure caused significant problems Once the heightened expenses had been completely integrated amidst the 2008 financial crisis.

However, those who were already retired got just a single boost in their pension payments back in 2002. Over the last 23 years, these retirees have not seen additional changes. haven't noticed any additional rises In their pension checks, despite inflation having diminished the value of a 2002 dollar to around 56 cents nowadays.

According to the data, there are 37,294 pre-Act 9 retirees who are currently living and eligible for PSERS benefits. fund’s actuarial data Their typical age stands at 84 years old, with an average annual pension of $19,219.

The benefits and demographic details of the approximately 21,596 remaining pre-Act 9 SERS retirees are quite comparable; however, these figures may shift rapidly from one financial reporting period to another.

Since the House approved the same legislation during the previous session 17 months ago, approximately 10,000 individuals who were eligible under pre-Act 9 provisions have unfortunately passed away, as stated by Representative Steve Malagari, a Democrat from Montgomery County.

"That’s 10,000 people who were denied the assistance they desperately needed because certain individuals on the opposite side of this building chose not to take action," Malagari stated, referring to the Republican-led Senate failing to address the legislation before the end of the 2023-24 session.

We enjoy discussing how we can support the elderly and look after those who have taken care of us. This is the moment to act," Malagari added, emphasizing that "inflation doesn’t stop when people retire. Our duty towards those who contributed to the common welfare shouldn't end either.

Malagari’s proposal aims to enhance pension benefits for pre-Act 9 retirees through a graduated approach ranging from 15% to 24.5%. Retirees who left service just prior to Act 9 would see the smallest increase, whereas those retiring earlier than July 1982 would receive the most substantial enhancement. These additional costs will be spread out evenly across ten years as part of the overall pension calculations.

The legislation was approved on Wednesday afternoon with a tally of 131 votes in favor and 72 against, where every member of the chamber’s Democratic leadership along with several Republicans supported it.

A number of Republicans voiced worries about finances, considering the additional expenses are not factored in. Gov. Josh Shapiro’ s budget proposal.

This is an issue we need to address once we look at the overall budget framework. Governor Shapiro didn’t include this in his proposed budget," stated Rep. Jesse Topper, R-Bedford, who serves as the Republican floor leader. Therefore, "we haven't determined how it will be financed.

Topper mentioned that his dad is a retired educator and falls into the category of pre-Act 9 retirees being discussed.

"To claim that I lack respect for the work he accomplished—both in raising me and in his role serving thousands of students over his career—just because I am unaware of the funding sources for this particular piece of legislation would be incorrect," Topper stated.

The funding for pension funds relies on several complex predictions, including the life expectancy of a specific group of retirees, the contributions from employed individuals and their resulting benefits, as well as the performance of the fund’s investment portfolio.

According to present projections, the additional advantages would boost the state’s overall unfunded pension obligation by approximately $979 million. Implementing this change starting from the initial year—2026-27—would raise required contributions for PSERS by around $100.5 million and add an extra $45.2 million for SERS during the same period.

The additional benefits would gradually be incorporated into the actuarial calculations over ten years, with the extra expense each year fluctuating based on real fund outcomes. These costs wouldn’t entirely fall on the state budget since roughly forty-five percent of PSERS contributions would originate from school district funds.

Several Republican critics raised concerns about why the state would allocate funds to employees who already receive both a pension and Social Security benefits.

"Why are we providing this assistance to individuals who already earn double what others do? It should be directed at the poorest senior citizens—those solely reliant on Social Security—not those receiving both Social Security and either a PSERS or SERS pension," stated Representative Brad Roae from Crawford County.

However, Democrats argued that the insufficiency of federally provided benefits should not serve as justification for avoiding increased state-sponsored assistance for those in need.

I believe it's a misleading option," Representative Emily Kinkead from Allegheny County stated. "We should move past the argument that providing certain advantages to particular individuals is offensive to others.