Contact Information 

District Offices
Lehigh County Office
Star Plaza, Suite 302
6299 Route 309
New Tripoli, PA 18066
(610) 760-7082
M-F 9 a.m. to 4:30 p.m.

Capitol Office
113 Ryan Office Building
PO Box 202187
Harrisburg, PA 17120-2187
Phone: (717) 787-3017
Fax: (717) 705-1951

Rep. Day Votes for Pension Reform

After considerable debate, the pension reform bill, House Bill 2497, today passed the state House by a 165-31 vote.  This bill, which seeks to reduce pension benefits while lowering the costs for taxpayers, now heads to Gov. Ed Rendell’s desk for his signature, said Rep. Gary Day (R-Lehigh/Berks). 


 “This legislation enacts significant reforms to reduce the costs of the state’s two pension systems. Although this bill doesn’t fully protect taxpayers and employees, it is an important step to rein in Pennsylvania’s pension fund liability,” Day said.  “This step in pension reforms scales back overly generous pension benefits for the past decade while maintaining an employee benefit.”


Day said that an important provision included in this legislation is the creation of a “shared risk” provision that shifts some of the burden of investment losses from the taxpayers to public employees. This is considered among the first of its kind in public employee pension systems throughout the country. In Pennsylvania, those are the Pennsylvania Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS).


Without action, state government and local school districts would be required to increase their contributions to the pension systems at double-digit rates as early as 2012, which would remain high for the foreseeable future.  These increased costs would be borne by both school property and state income taxpayers.


If the governor signs House Bill 2497 into law, long-term costs and reduced pension benefits would apply to future employees and members of the systems.


Specifically, this bill includes nine long-term reforms that will considerably affect the benefits offered to all new state employees, school district employees and legislators, such as:


?        Rolling back the benefit enhancement of 2001 and reducing the benefit multiplier from 2.5 percent to 2 percent for employees and from 3 percent to 2 percent for lawmakers while maintaining employee contribution rates of 6.25 percent for members of SERS and 7.5 percent for members of PSERS. 

?        Increasing the vesting period from five years to 10 years.

?        Increasing the retirement age from 60 to 65 for state employees and from 62 to 65 for school employees.

?        Eliminating the lump sum option that currently permits retiring employees to withdraw all of their contributions at the end of their career, while receiving a monthly benefit for the remainder of their life.

?        Prohibiting the use of pension obligation bonds to prop up or mask the funded status of either plan.

?        Capping the retirement benefit under the new plan at the member’s pre-retirement salary, regardless of how many years of service.

?        Reducing the “fresh start” amortization of the plan’s liabilities from 30 years to 24 years.

?        Requiring any future “purchase of service” to be priced so that they are actuarially neutral.

?        Creating a “shared risk” provision, which would adjust the employee contribution rate when investment performance is poor. The employer or the taxpayer would no longer be solely responsible for investment losses in the future. 


These changes would apply to lawmakers taking office on and after Dec. 1, 2010, state employees hired after Jan. 1, 2011, and school employees hired after July 1, 2011.


“Previous legislatures have allowed the system to be underfunded and contract negotiations have pushed benefits beyond a sustainable level,” Day said. “All participants must get engaged, at all times, and work together to take care of the retirement needs of our public employees, without breaking the wallets of our taxpayers.”


Rep. Gary Day

187th District

Pennsylvania House of Representatives

(717) 787-3017

(610) 760-7082

Contact:  Jennifer Algoe Keaton

(717) 705-2094

Member Site:

Caucus Site:


Share |