Philadelphia Pension “Reform” is Generational Theft

CF testifies to PA Senate on HB 1828 

HARRISBURG, PA — Commonwealth Foundation senior fellow Rick Dreyfuss testified today before the Pennsylvania Senate Finance Committee that changes in the state pension code proposed by HB 1828—which would allow the city of Philadelphia to defer pension payments—are fiscally irresponsible.

“HB 1828 creates more problems than it purports to solve,” Dreyfuss told lawmakers. “Why does contributing less to an already poorly funded plan get marked as sound public policy?”

Dreyfuss warned of the long-term implications of the bill.  Chiefly, HB 1828 would legalize greater financial manipulation to the detriment of current and future taxpayers.  “It is generational theft,” he said.  The Pennsylvania House’s expedited consideration of the bill inhibited a thorough understanding of HB 1828’s consequences.

In contrast to HB 1828, Dreyfuss recommended a five-step municipal pension reform plan:

1. Enroll new employees in a unified contribution plan (SB 566).
2. Standardize reporting requirements.
3. Implement responsible amortization periods.
4. Set amortization payments based upon level payment.
5. Implement asset values subject to corridors of market value and limited periods.

“The General Assembly must implement these steps in order before considering other changes to any of Pennsylvania’s public pension plans,” Dreyfuss noted.