Grell: Consolidate Police Pensions into One Pension Plan

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This is a very good idea. Collectively, Pennsylvanians send way more money to Wall Street than is necessary to manage all these tiny pension plans with just a few people in them. And the municipalities who are playing professional investor and managing their plans in-house is something that could really keep you up at night in if you think about it.

One state lawmaker is envisioning a statewide pension plan for local police, instead of the vast array of smaller, municipality-specific funds for officers.

The idea is to take the hundreds of individual municipal police pension funds and gradually switch to a statewide plan. In that plan, Rep. Glen Grell (R-Cumberland) said members would still get defined-benefit pensions, but they wouldn’t get automatic benefit boosts known as cost-of-living adjustments.

“It would be mandatory for any new municipal police officers anywhere in the state and it would be optional for plans that want to convert into the statewide fund,” said Grell. He added would support a statewide option for non-police municipal employees as well, but he didn’t want to take that big a bite of the apple just yet.

The most recent state report on municipal pensions shows there are 965 different plans for local police and that most municipal plans contain fewer than 10 people. The same report shows the cost per member goes down as the membership of the plan increases.

(via Mary Wilson)

This entry was posted in Miscellany.

3 Responses to Grell: Consolidate Police Pensions into One Pension Plan

  1. GDub says:

    There’s nothing really worth getting excited about here. Consolidating pensions and lowering management costs is a good idea of course, but Wall Street’s fees isn’t what gets municipalities in trouble.

    Pension health for defined benefit pensions primarily relies on three factors: the level of benefit promised, the level of assumed growth of the pension fund’s assets, and the annual cash contributions into the fund. A conservative pension goal and prudent investing would get most municipalities there, but it is expensive and hard to do.

    California’s personnel and teacher pension funds are consolidated and rank among the largest in the world. They also don’t come anywhere close to delivering what they need to, because politicians could just assume 10% asset growth in a bad economy.

  2. phillydem says:

    This is long overdue. Police pension costs are by far the largest expense for small municipalities and I’m sure a good chunk of the budget in larger ones.

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