Consolidation urged for ailing pension plans



Times-Shamrock Writer

The state’s top fiscal watchdog is calling for consolidation of the numerous municipal pension plans into a statewide system as a way to produce higher yields on investments and reduce administrative costs.

Pennsylvania is saddled with too many small and inadequately funded municipal pension plans that cost taxpayers millions of dollars to run, said Auditor General Jack Wagner last week.

Among them are Forest Lake, Liberty and Susquehanna Depot townships in Susquehanna County.

“Consolidation is the best way to preserve benefits for retirees and future retirees while protecting taxpayers from higher tax bills they can’t afford,” Wagner told the Pennsylvania Employee Retirement Commission.

He said consolidation could be done either with a statewide system with different classes of employees such as police, firefighters and non-uniformed or giving the State Employees’ Retirement System authority to administer the individual plans.

Pennsylvania’s 3,200 local government pension plans comprise more than 25 percent of the public pension plans in the United States. The pension plans range in size from a handful of members to more than 20,000 active members. But two-thirds of the plans have 10 or fewer members.

Wagner released an audit report showing that 36 percent of the plans are considered financially distressed and separated into three categories: severely, moderately and minimally.

Consolidation could have the greatest impact on the 52 plans that fall in the severely distressed category. They are underfunded with less than 50 percent of their plan liabilities covered.

The pension reform issue is on the front burner due to a spike in payments by state and local taxpayers to meet obligations. PERC is holding a series of hearings this fall to examine issues.