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House of Representatives
Session of 2021 - 2022 Regular Session


Posted: December 3, 2020 10:07 AM
From: Representative Keith J. Greiner and Rep. Seth M. Grove
To: All House members
Subject: Municipal Pension Reform - Former HB 2081
In the near future, I plan on introducing legislation based on the Auditor General’s pension reform recommendations. As of 2013, the Auditor General found that 562 of the 1,223 local government pension plans were classified as “distressed”.

As part of his report on the financial health of municipal pensions, the Auditor General proposed a series of recommendations to help reduce spending on pensions to ensure their long-term sustainability. My legislation will codify the Auditor General’s recommendations. A few of the recommendations are:

Addressing the over inflation of a municipalities assumed rate of return by requiring it to use PMRS’s rate +/- 1%, to help control unfunded liabilities. If the plan does not reach their assumed rate of return, a lower assumed rate of return should prevent a spike in unfunded liability.

Increasing the retirement age to 60, and the minimum years of service to 25 years. When these pensions were originally created, life expectancies have risen nearly 20 years. Today’s pensions should be calculated using current life expectancy figures. Cap the amount of overtime that can be used in the calculation of an individual’s final average salary at 10%. This change can potentially save municipalities millions of dollars.

Currently, collective bargaining agreements permit any overtime and accrued leave payments to be included in the equation of an individual’s final salary level. A 2013 study by Allegheny County found that 30 retirees “spiked” their pension payout’s by adding in the overtime pay they acquired. This cost the county nearly an additional $1 million pension payout each year.

The recommendations included in this legislation will not impact current employees, but the solutions recommended by the Auditor General could save these municipalities millions over the foreseeable future.

Please join me in sponsoring this bipartisan legislation to strengthen the financial sustainability of our municipal pension systems.

If you have questions, please contact Tierna at 3-6422 or ttuckey@pahousegop.com