Judge Michael Wojcik, writing for the en banc court’s opinion, emphasized, “It is impossible to calculate an annuity of a defined-contribution retirement plan because it depends on individual choice and future market performance…There is a factual discrepancy regarding the impact of the new plan and whether it creates an actuarial discrepancy akin to the two-tiered system of compensation found unconstitutional in Klein.”
The Uncertainty Factor
Given the inability to conclusively compare retirement benefits before and after the 2017 amendment, the Commonwealth Court concluded that the changes did not appear to violate sections of the state constitution requiring a “unified judicial system” with equal pay for equal work or the constitutional prohibition on the “diminishment” of judicial pay.
Two-Tiered System?
The judges who initiated the lawsuit pointed to the analysis conducted by the state’s Independent Fiscal Office, predicting that judges retiring after 30 years before 2019 would receive an annual annuity of $144,418, while those who began after 2019 under the “hybrid” system would only receive $77,188. This stark difference prompted them to argue that it created a “two-tiered” system of retirement benefits.
Pennsylvania Judges’ Retirement Plan : A Shift in Perspective
In the landmark Klein case, judges challenged a 1974 amendment to the state pension system, arguing it would result in a $32,000 drop in their pension benefits. While a plurality of the state Supreme Court in 1989 agreed the change created a “two-tiered” system, they disagreed on the constitutional basis for this determination.
