Municipal pension reform needs careful analysis
It's ironic that state lawmakers, who are eligible for astounding pension benefits, are interested in reforming the pension contributions for municipal police and firefighters.
York Republican Seth Grove, R-196, says he'll present a reform bill by the end of the week, and he does indeed have a point about municipal pension benefits and their strain on local budgets. Borough Council President Tony Matulewicz told us Mount Carmel is paying $208,000 toward pensions from a $1.7 million budget, representing more than 12 percent. However, considering the borough is underfunding its pension plan by some $700,000, Matulewicz said, it pushes that percentage well past 50.
Mount Carmel may represent a worst-case scenario locally, but pensions represent a growing concern everywhere, and Grove and the Coalition of Sustainable Communities says its time to do something about it.
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Grove's proposal would place new hires for police and fire departments under a cash balance pension plan. It would have a formula based on a percentage of pay that provides less of a pension benefit than under a traditional defined-benefit plan.
Current police and fire employees would keep existing benefits, but they would be frozen at current levels, Grove proposes.
He said that while lawmakers have been focused on Gov. Tom Corbett's proposal to put new state government and school district employees under a 401(k)-defined contribution plan, municipal pension problems need to be tackled, too, because many are severely underfunded - $700,000 in Mount Carmel - and pension problems lead to higher taxes and reduced services, and threaten retirement security.
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Meanwhile, the average legislative pension is $31,314, according to figures provided by the state retirement board to the Pittsburgh Tribune Review earlier this year. But some do much better. Sen. Jeffrey Piccola, who retired at the end of 2012, is set to receive $83,846 a year - more than the $82,206 salary that rank and file lawmakers were paid in 2012. And, he took a $211,855 lump sum payout for his 36 years of legislative service in the House and Senate, based on money he put toward his pension over the years, the Patriot News reported.
So while reform is at hand, Rep. Grove and his colleagues should not lose focus on proposals to reign in their own pension benefits. And while municipal pension reform for police and firefighters should help communities, it should not be so drastic as to deter those from seeking these difficult and demanding jobs, nor should it penalize those who have been serving for years with the reassurance that their daily risk to safety provides some larger reward in the end.