The Pennsylvania Senate's approval of House Bill 1828 is an encouraging sign that the commonwealth is finally addressing the problem of underfunded municipal pension plans ("Senate OKs Pension Bill Affecting City," Aug. 27). While the problem has been with us for years, there is new urgency to act.
The existing law requires municipalities to base future plan contributions on January 2009 asset valuations when markets were at their lowest. Municipalities need the bill's provisions to manage budgets and avert higher taxes and/or reduced services.
Pittsburgh would like an additional two years to solve its pension liabilities on its own, perhaps by selling or leasing Parking Authority property. That deal is far from done. Moreover, current law requires pension contributions to be recognized over many years -- the Parking Authority plan, while worth examining for the city's general fiscal health, will not rescue its pension plans.
HB 1828 phases in payment increases gradually, requiring higher payments than the Act 47 plan mandates first in 2013. While the bill will ultimately mandate higher payments, that is precisely the point -- to bring underfunded pension plans into solvency will require fiscal discipline.
HB 1828 increases municipal fiscal stability with such reforms as prohibiting spiking of benefits with excessive overtime and permitting the establishment of defined contribution plans. The private sector has already adopted such measures -- the time has come for the public sector to embrace these improvements.
HB 1828 takes major steps toward improving the stability of municipal pension plans and protecting the assets of future retirees. We heartily support prompt House concurrence in the measure.
KATHRYN Z. KLABER
Pennsylvania Economy League