HARRISBURG - A pending House bill to curb municipal pension benefits for future paid police and firefighters was touted by the sponsor Monday as a way to help financially distressed cities.
Rep. Seth Grove, R-196, York, outlined legislation that would place new hires for these two public safety departments under a cash balance pension plan. This plan would have a formula based on a percentage of pay that provides less of a pension benefit than under a traditional defined-benefit plan, according to a legislative memo.
Under a cash balance plan, new employees after the act's effective date would have a pension composed of mandatory employer and employee contributions and an employer-guaranteed interest credit. Employees under a cash balance plan wouldn't be eligible for post-retirement health care benefits.
Under the proposal, current police and fire employees would keep existing benefits, but they would be frozen at current levels.
"My reform proposal is designed to reduce the financial burden on local governments, safeguard public safety employee opportunities and pensions, and ensure the financial sustainability of all communities," said Mr. Grove.
Mr. Grove plans to formally introduce the bill later this week. He was flanked at a Capitol news conference by leaders of the Coalition of Sustainable Communities, a group of municipal officials, local chambers of commerce and economic development organizations.
The provision to freeze benefits for current employees at existing levels could have an impact if enacted on the future of the collective bargaining process under Act 111 for paid police and firefighters, supporters said.
The municipal pension debate figures in the larger debate over how to bring fiscally distressed municipalities in Act 47 like Scranton back to solvency.
Lawmakers have been focused in recent months on Gov. Tom Corbett's proposal to put new state government and school district employees under a 401(k)-defined contribution plan, but Mr. Grove said municipal pension problems need to be tackled too.
"We've been upset at the lack of action in Harrisburg," said Allentown Mayor Ed Pawlowski.
Municipal pension issues need attention because many of the plans are severely underfunded, according to the coalition. Pension problems lead to higher taxes and reduced services and threaten retirement security.
The bill will deal only with pensions for police and firefighters rather than all municipal employees because the former account for the largest share of pension costs, said Mr. Grove and coalition members.
Les Neri, president of the Fraternal Order of Police, was critical of the proposal.
"The Grove proposal would force new hires into a savings plan similar to a 401(k) plan, fail to require employers to provide pension benefits for officers injured in the line of duty and make it illegal for officers to receive any other type of post-retirement benefits," he said.
Contact the writer: rswift@timesshamrock.com