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House of Representatives
Session of 2015 - 2016 Regular Session


Posted: April 13, 2016 09:48 AM
From: Representative Scott Conklin
To: All House members
Subject: Elected Officials' Opt-in Timeframe for SERS
In the near future, I plan to introduce legislation amending Title 71 (State Government) of the Pennsylvania Consolidated Statutes, which will limit the time period for certain elected officials to opt-in to the State Employees Retirement System (SERS).

During a House Appropriations budget hearing on March 6, 2016, SERS Executive Director David Durbin stated that the system’s unfunded liability is expected to reach $18.8 billion in April. As you know, both SERS and PSERS unfunded liabilities are a result of several factors including investment losses from 2000 through 2002 and 2009-10, and benefit enhancements provided through Act 9 of 2001 and Act 38 of 2002. While Act 120 of 2010 established statutory employer contribution rates, unexpected costs still play a role in exacerbating the systems’ unfunded liabilities. For SERS, one of the culprits is individuals who elect service to the pension system and after a lengthy career. While SERS can account for the employer contributions for an employee who is required to opt-in to service, the system cannot account for those employees who have the option of electing service prior to retirement. Accordingly, the system accrues an unfunded liability for that individual. While minuscule in comparison to the current unfunded liability, we must ensure that any liabilities to the pension systems are properly funded.

In order to ensure that the progress made by Act 120 of 2010 is not impeded, my bill limit the time for electing membership to SERS to 365 days for the Governor, Lieutenant Governor and members of the General Assembly. After one year elapses, these eligible individuals will not have the option to elect service to SERS until after a bona fide termination of State service and return to State service in a position allowing membership. While this change may not resolve SERS’s current unfunded liability, it is a reasonable step to ensure that it is not exacerbated in future years.

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Introduced as HB2098