- Associated Press - Tuesday, May 17, 2016

HARRISBURG, Pa. (AP) - A Republican plan to help address Pennsylvania’s massive pension debt moved out of a legislative committee on Tuesday, putting a divisive and expensive problem on the table as budget talks are about to pick up steam.

The House State Government Committee voted on party lines to approve a proposal to divert newly hired public school and state government employees into a retirement system that combines a traditional pension benefit with a 401(k)-style account.

Supporters say the bill would save the state about $10 billion over 30 years and help insulate taxpayers from the ups and downs of the stock market. Pennsylvania has a pension debt of more than $50 billion, and its increasingly expensive state pension payments - caused in large part by decisions to increase benefits and delay costs - are eating into the budget.

“It will just allow the risk to be shared evenly,” said Rep. Rick Saccone, R-Allegheny.

But Democrats argued that while the state has underfunded the plans, workers have continued to have money deducted from their paychecks for their “share” of pension costs. They warned that lower pension benefits could drive salaries higher to attract quality job candidates and argued that the changes being considered would not help with state budgeting in the near future.

“I don’t think, on its own terms, this is a solution to our pension problems,” said Rep. Mark Cohen of Philadelphia, the committee’s ranking Democrat.

The bill would count employee income of up to $50,000 toward a traditional pension benefit for 25 years. Workers would be able to continue saving for retirement in a 401(k)-style defined contribution plan after reaching those benchmarks.

The bill would exempt state troopers from the new plan, but their pension payments would be capped at 110 percent of their base salary.

Current state and school employees would see no change in their retirement benefits.

The committee did not take up a companion bill that would force the state to pay off its entire pension debt over the next 20 years.

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