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Changes to law, raising age for benefits suggested for Pa. pension reform

| Thursday, April 14, 2016, 11:00 p.m.
Eric Montarti, Senior Policy Analyst, Allegheny Institute for Public Poilicy, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.
Evan Sanders | Tribune-Review
Eric Montarti, Senior Policy Analyst, Allegheny Institute for Public Poilicy, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.
Joseph Weale, CPA, Deputy Director, PA Department of the Auditor General, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.
Evan Sanders | Tribune-Review
Joseph Weale, CPA, Deputy Director, PA Department of the Auditor General, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.
Eric Montarti, Senior Policy Analyst, Allegheny Institute for Public Poilicy, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.
Evan Sanders | Tribune-Review
Eric Montarti, Senior Policy Analyst, Allegheny Institute for Public Poilicy, addresses those who attended The Westmoreland Chamber of Commerce April Member Luncheon held at the Westmoreland Country Club in Export on Thursday, April 14, 2016.

Pennsylvania's pension crisis is large, multifaceted and won't be easily alleviated, experts told a gathering of business and government leaders Thursday.

Pension reform is perpetually debated in Harrisburg as lawmakers grapple with ways to change public pensions and stem the rising unfunded liability, which is more than $50 billion.

At a luncheon sponsored by the Westmoreland County Chamber of Commerce, Eric Montarti, a senior policy analyst with the Allegheny Institute for Public Policy, described the pension landscape across Pennsylvania.

Joseph Weale, deputy director of the state Department of the Auditor General, laid out recommendations for easing the state's pension woes.

“Pension reform is not the sexiest topic you're going to hear about,” Chad Amond, president of the chamber, told attendees. “We know the numbers they talk about are going to impact our businesses, our communities.”

The pension fund for state employees is about 59 percent funded, meaning its assets cover that much of the outstanding benefits due to retirees. The fund for public school teachers' pensions is about 62 percent funded, Montarti said.

Shortfalls for the two pension systems, however, are about $18 billion and $35 billion, respectively, he said.

Local pension plans fare slightly better.

In Westmoreland County, there are 1.8 workers contributing to the 105 municipal pension plans for every retiree collecting benefits — a better ratio than some cities, Montarti said.

Pension funding is like a three-legged stool, with money coming from workers' contributions, municipal contributions and investment returns, Weale said.

“If you don't have those three legs, (the stool) is going to be wobbly,” Weale said. “The solutions are going to have to be varied ... and broad-based.”

The Auditor General's Office recommends changing a state law that allows actuaries to assume up to 9 percent annual returns on pension investments, he said.

If municipalities build their budgets assuming 8 percent or 9 percent returns and their investments don't hit that, it's taxpayers who have to make up the difference, Weale said.

Other reforms Weale touted included raising the age at which workers can collect public pensions, consolidating some of the about 3,000 local pension funds and limiting how much overtime pay can be factored into retirement payment calculations.

State Rep. Eric Nelson, R-Hempfield, told attendees to reach out to their state lawmakers, not only to urge them to support pension reform bills in the legislature, but to prevent exceptions from being carved out for certain groups of public employees.

“We must keep the pressure on,” Nelson said.

“This is a real simple proposition,” Penn Township Manager Alex Graziani said. “You're either going to pave less roads or pay more taxes.”

Graziani said the current guaranteed benefit plans enable a police officer to retire at 55 with 30 years of service, with the possibility that he or she may live to collect benefits for another 40 years.

“It's not sustainable,” Graziani said.

Kari Andren is a Tribune-Review staff writer. Reach her at 724-850-2856 or kandren@tribweb.com.

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