Pennsylvania lawmakers are seeking to place about 30 municipal pension plans, including Pittsburgh’s retirement system, under state control to help plans that are below 50% funded.
Many local governments will face dramatic increases in their pension contributions next year due in part to investment losses in pension funds.
“All in one year they’re going to start seeing twice as much that has to be paid out — in some places it’s three times,” said James McAneny, executive director of the Pennsylvania Public Employee Retirement Commission.
The initiative would take away local governments’ ability to negotiate retirement benefits and would also hold worker benefits at their current levels. Municipalities would still be required to contribute to the fund, but the state would be the administrator of the plans.
“These plans remain the financial responsibility of the municipalities; retain their own assets, liabilities and plan experience; but are pooled for investment and administrative purposes,” according to a report submitted by McAneny, who testified before the Senate Finance Committee last week regarding the issue of pension reforms in Pennsylvania.
In addition to lower-funded local pension systems merging with the state plan, lawmakers are considering allowing local governments to spread out their amortization schedules over a longer period of time and also calculate investment gains and losses over a 30-year time frame as opposed to the current 20-year period.