Could Lowering The Retirement Age Help Pennsylvania's Pension Crisis?

Apr 27, 2015

State Rep. Peter Daley (D-Washington) believes he has part of the solution for the $41 billion unfunded state pension crisis in Pennsylvania.

Daley says that if the retirement age for teachers and state workers was lowered it would save the state money by phasing out higher paid teachers, and bring in new lower paid teachers with a 25 percent reduction in pensions.  

House Bill 861 would affect teachers, and House Bill 862 is for state workers.

The legislation would allow people to retire after 30 years’ experience, five years earlier than the current system. Daley said his legislation would save the state about $800 million, and create about 14,000 entry level jobs.   

“It actuates the pension program earlier for those folks, but also the people going into that system will be at a less pension, so it really does work. It’s worked in other states. It worked in Pennsylvania several years ago under an old plan called the mellow plan. It makes the system work better,” said Daley.

The “Mellow Plan” passed in 1992 gave teachers 55 years or older with 10 or more years’ service a chance to retire early.

Some critics have said in the short term this did save schools money, but overtime it ended up costing schools more. The money schools saved by paying lower starting salaries were soon outweighed by the extra years of pensions they had to pay the retired workers. 

Daley disagrees with this analysis. Daley did acknowledge that the bill would phase out experienced workers, but he says young people are capable.

“I think the younger people coming out of the university and colleges today and the training is much different than it was 35 years ago, because I know. I graduated college 35 years ago; my requirement when I was a public school teacher is a heck of a lot less than it is today,” said Daley.

HB 861 has been referred to the Education Committee and HB 862 is in the House State Government Committee.