Pennsylvania Pension Officials Air Concerns Over Reform Legislation, Underfunding

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The executive director of one of Pennsylvania’s largest pension systems on Tuesday voiced concerns about the specifics of a piece of pension legislation, approved by the state Senate earlier this week, that would overhaul the state’s pension system for new hires.

It’s rare for pension system officials to take a public stance on pending legislation; but there are concerns that the bill would allow the state to curtail its pension contributions by tens of millions of dollars.

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Pennsylvania’s largest retirement system is slamming a state Senate-approved pension overhaul that would further reduce, or “collar,” state payments into its pension funds.

“Typically the retirement system does not take positions on legislative proposals,” said Glen Grell, executive director of the Public School Employees’ Retirement System on Tuesday. “But we as fiduciaries are concerned about collaring the rate, which is another word for underfunding the plan.”

The state’s two pension systems together are underfunded by more than $50 billion, a debt fueled in part by legislative actions to reduce what the state contributes to the plans.

A Senate proposal passed by the chamber on Monday would reduce the state’s payments by $170 million, a short-term boon that will cost more to pay back.

“I’m not interested in PSERS opinion quite frankly,” said GOP Senate Majority Leader Jake Corman, defending the Senate-passed payment reductions. “It’s a small collar … and adds a little budget relief to the budget so we can fund our schools better.”

Corman added that the costs of shirking the state’s pension bill are eclipsed by savings from other pieces of the pension overhaul. But those changes will affect current employees’ retirement benefits, and at least one critic expects them to be countered with a lawsuit.

State Gov. Tom Wolf has said he will sign the bill if it gets to his desk. But the legislation’s fate in the House is uncertain.

 

Photo credit: “Flag-map of Pennsylvania” by Niagara – Own work from File:Flag of Pennsylvania.svg and File:USA Pennsylvania location map.svgThis vector image was created with Inkscape. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

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