Pension Reform: Pennsylvania Seeks to Ensure Annual Payments, Avoid Traps of Underfunding | The state
(Central Square) – The Pension Reform Bill will clean up the language in the Pennsylvania Statute, which previously abolished state contributions, allowing pension funds to be underfunded.
HB1578introduced by the representative of Don Kiefer, RV / Cumberland, removes the provisions on the collar from the state pension legislation, which artificially abolished the annual mandatory contributions paid to pension funds.
“Legislative contributions from employers who have artificially reduced SERS and PSERS contribution rates for a number of years are no longer valid,” Kiefer wrote in legislative note. “However, the legal language that implements the collars remains in the SERS and PSERS codes.”
SERS stands for Pennsylvania Pennsylvania System; PSERS is an abbreviation of the public school pension system.
In previous years, Pennsylvania did not pay in full to ARC due to the power of market achievements, Kiefer said. Although the state has returned to making the necessary payments, it wants to ensure that bad fiscal habits cannot be restored in the future.
There is good reason to prevent the return of these bad habits – the Commonwealth lags behind the rest of the nation in funding its retirement plans. Pennsylvania funded only 56% of its state retirement plans in fiscal year 2019, according to The tax fund, which ranks 41st in the national rankings.
Some impetus for reform comes from a wide range Report for 2018 from the Commission on the Review of State Pensions and Investments in the Assets of the Pennsylvania Treasury. The report offered the governor and the General Assembly recommendations for maintaining the state pension system in improvement and avoiding serious economic disturbances.
“The figures are difficult to understand, and the effect of more than $ 60 billion in pension debt is much higher than in dollars and cents,” the report said. “Major government services have been affected; from protecting our most vulnerable and elderly citizens to maintaining our highways and funding our schools. As a result, the tax burden for property owners, families and businesses is significant.
Kiefer’s bill is one attempt to tackle pension reform in smaller parts, rather than trying to fix all the problems in one fell swoop. She expects that removing the collar shouldn’t be too controversial.
“I hope it can gain some traction because it has no fiscal impact – the state pays their ARC as it is,” Kiefer said. “It should be a good government cleanup.”
“That’s what we’re already doing,” she said. “It won’t cost us more money to do it.”
https://www.indianagazette.com/news/state/pension-reform-pennsylvania-looks-to-ensure-annual-payments-avoid-underfunding-trap/article_86c0e9cc-5e7c-55a0-8fd1-4acc9d37829e.html
