After many fits and false starts to pension reform, Pennsylvania’s governor has a signed a measure that establishes a hybrid defined benefit/defined contribution plan for new state employees.
Although some industry observers believe the new law is a step in the right direction, several others said the switch to a hybrid DB/DC plan does little — if anything — to solve the state’s core underfunding problem.
“What’s notable about this plan design change in Pennsylvania is that it does very little to address the underfunding,” said Alex Brown, research manager for the National Association of State Retirement Administrators, Washington. “Most of what this change does is address the composition of risk between the participating employers and the members.”