Kurt Bresswein reports:
Wagner, who leaves office after this year under term limits, proposed today consolidating some of the state’s 3,200-plus municipal pension plans into a statewide system for different classes of employees such as police officers, firefighters and non-uniform workers.
Wagner said consolidation would yield higher investment return rates for municipal employees, reduce administrative expenses and help reduce the need for increased contributions from taxpayers.
“Pennsylvania has too many small and underfunded municipal pension plans that could cost taxpayers millions of dollars to maintain,” Wagner said in a statement. “Consolidation is the best way to preserve benefits for retirees and future retirees while protecting taxpayers from higher tax bills they can’t afford.”
Pennsylvania has more than 3,200 local government pension plans — about a quarter of all the municipal plans in the United States, Wagner said.
The Department of the Auditor General is responsible for auditing about 2,600 of those plans; the remaining 600 are county and municipal plans over which it has no jurisdiction. Wagner’s proposal is to create a statewide system for the 2,600 or so under his office’s purview.
John Callahan and Glenn Steckman say this is no silver bullet, which is true, but there is no silver bullet in pension reform. It’s just whatever you can do to save money here and there within the bounds of the law and politics. The biggest thing you could do – reducing already-promised compensation – is illegal and off-limits. The remaining options are all relatively small-bore. But that just means you need to do all of them. Switch to defined-contribution plans for future employees, but also stop getting ripped off on fund management by having so many small plans.