The Pennsylvania Employee Retirement Commission’s recently issued report has some good news for Pennsylvania public pension plans, but also shows that there is more work to do. The report, issued in December, is based on 2013 actuarial municipal pension plan data.
The report, which looks at the health of more than 3,200 local government pension plans in the Keystone State, says that in more than half — 55.8% — of Pennsylvania municipalities, the pension plans are not considered to be distressed. The state considers a plan that is less than 90% funded to be distressed. Following are the distress levels the state uses to gauge the health of local pension plans:
Level 1: 70%-89% funded — minimal distress; voluntary remedies recommended.
Level 2: 50%-69% funded — moderate distress; voluntary remedies recommended, but two municipality must also take two mandatory steps. These are aggregation of pension funds for administration and investment and the submission of a plan for administrative improvement.
Level 3: less than 50% funded — severe distress; voluntary remedies recommended, but two municipality must also take three mandatory steps. These are aggregation of pension funds for administration and investment, submission of a plan for administrative improvement and establishment of a revised benefit plan for newly hired employees.
The report says that 90.3% of municipalities’ plans are minimally distressed or not distressed at all, and 55.8% are the latter. Only 9.7% are moderately or severely distressed, and just 1.6% of those are in the latter category.
The Erie Times-News reports that among major Pennsylvania cities, there were mixed results. Erie, the state’s 4th largest city, is in minimal distress at 74%, and state capital Harrisburg, the 9th most populous, is at a robust 109% and not distressed. But Philadelphia, the state’s largest city and 5th largest in the United States, is in severe distress with plans that are 47% funded. And Scranton, the state’s 6th most populous state, is in even worse shape at 23%.
The report, which looks at the health of more than 3,200 local government pension plans in the Keystone State, says that in more than half — 55.8% — of Pennsylvania municipalities, the pension plans are not considered to be distressed. The state considers a plan that is less than 90% funded to be distressed. Following are the distress levels the state uses to gauge the health of local pension plans:
Level 1: 70%-89% funded — minimal distress; voluntary remedies recommended.
Level 2: 50%-69% funded — moderate distress; voluntary remedies recommended, but two municipality must also take two mandatory steps. These are aggregation of pension funds for administration and investment and the submission of a plan for administrative improvement.
Level 3: less than 50% funded — severe distress; voluntary remedies recommended, but two municipality must also take three mandatory steps. These are aggregation of pension funds for administration and investment, submission of a plan for administrative improvement and establishment of a revised benefit plan for newly hired employees.
The report says that 90.3% of municipalities’ plans are minimally distressed or not distressed at all, and 55.8% are the latter. Only 9.7% are moderately or severely distressed, and just 1.6% of those are in the latter category.
The Erie Times-News reports that among major Pennsylvania cities, there were mixed results. Erie, the state’s 4th largest city, is in minimal distress at 74%, and state capital Harrisburg, the 9th most populous, is at a robust 109% and not distressed. But Philadelphia, the state’s largest city and 5th largest in the United States, is in severe distress with plans that are 47% funded. And Scranton, the state’s 6th most populous state, is in even worse shape at 23%.
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