Plan to change General Assembly pensions

July 15, 2010
By Matt Coyne

With a crisis looming, Rep. Tim Krieger (R - Westmoreland) expects legislators to set an example and reform their own pensions before 2012, when state public pension contributions are expected to jump roughly 20 percent.

"I plan to introduce legislation that would convert members of the General Assembly from the present defined benefit plan to a defined contribution plan as of Dec. 1 2010," a statement from Mr. Krieger said. "Practicing what we preach is essential if we are to restore the credibility of the General Assembly, which will be especially important over the next several years as we face projected multi-billion dollar deficits."

Both public pension plans, the Pennsylvania School Employees Retirement System (PSERS) and the State Employees Retirement System (SERS) will need, by some estimates, as much as $5.9 billion to cover unfunded liabilities, in part due to the recession. Legislators are included in the SERS.

Mr. Krieger's legislation would "make that conversion mandatory for all members, whether new or presently serving."

"Conceptually, it's a good idea. It's consistent with what you see in the private sector. I think it has merit on this basis alone," said Rick Dreyfuss, senior fellow at the Commonwealth Foundation, a Harrisburg-based limited government think tank. "When you do the math, it doesn't have a particularly significant financial impact. But what it does have is a more significant political impact."

"We have believed for some time that it is unconstitutional for legislators to participate in state pension systems," said Tim Potts, co-founder and president of Democracy Rising PA. "This is a good thing, because it will invite greater scrutiny of the pension system."

Article II, Section 8 of the state Constitution reads, "The members of the General Assembly shall receive such salary and mileage for regular and special sessions as shall be fixed by law, and no other compensation whatever, whether for service upon committee or otherwise."

"A pension is compensation. It is not salary, it is not mileage," Mr. Potts said.

"The General Assembly will be called upon to make some difficult choices in the future to ensure the financial soundness of the public pension system. I believe, as elected officials, we should lead by example," Mr. Krieger said. "Few of our constituents have the opportunity to participate in a defined benefit plan. As public servants, there is no reason that members of the General Assembly should enjoy benefits that our taxpaying constituents cannot afford."

The fiscal year 2010-2011 budget cut PSERS funding from $342 million to $287 million. According to Mr. Dreyfuss, SERS was most likely cut as well, by how much is difficult to determine, though, since pension contributions to SERS are done by department.

Mr. Krieger was one of six House members who voted against H.B. 2497 in June, which would shrunk pensions by 20 percent and eliminate the ability of retirees to withdraw their own contributions, plus interest, upon retirement.

The bill is currently before the Senate Finance Committee. Senate Republicans say the bill will cost taxpayers $27 billion over 30 years.

Matt Coyne is an intern at the PA Independent. He can be reached at intern@paindependent.com

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