Pennsylvania legislators should tackle county pension law changes that would reduce the burden on taxpayers down the road, officials said during a recent Luzerne County Retirement Board meeting.
Retirement board member John Evanchick Jr. raised the issue, pointing to the law’s requirement to provide a pension to exiting workers over age 60, regardless of how long they’ve worked for the county.
Typically, employees must have five years of county employment to be vested, or eligible, to receive a pension.
The over-60 provision was publicized in 2012, when several former employees were awarded pensions with less than five years of employment.
For example, prior commissioner Thomas Cooney and sheriff John Gilligan were approved for monthly pensions of $71 with only two years of county employment, officials said. Former purchasing director Frank Pugliese also qualified for a $220 monthly county pension in 2012 after three years on the job, records show.
“Maybe something could be done with legislation,” Evanchick, a county deputy sheriff, recently told his fellow board members. “If vesting is five years for others, it should be five years for all.”
County retirement coordinator Rick Hummer cited the retirement age as another matter worthy of state reconsideration.
Under state pension law, also known as Act 96, former county workers with 20-plus years of employment can retire at 55, while those with less must wait until age 60 to receive a pension.
The pension fund’s latest mortality tables indicate the average lifespan is 74 for men and 76 for women, Hummer said.
When the county plan was set up in the early 1940s, the mortality rate ranged from approximately 66 to 68, he noted.
He suggested changing the pension qualification age to 65 for employees with more than 20 years of service and 70 for vested employees who have less than 20 years.
“Because people are living longer, we’re paying out more. How can that be sustainable?” Hummer asked.
He also urges legislators to consider reducing the amount of interest the county must pay on employee pension contributions.
The law allows the fund to pay 4 percent to 5.5 percent, and Luzerne County switched from the maximum to minimum in 2010 to reduce expenses.
Legislators should give counties the option to lower the percentage to 3 percent, Hummer said.
“I think people would say 3 percent is still better than what the market is giving us. We have to be financially responsible to make sure pensions are protected.”
County Councilman Harry Haas, who heads council’s legislative committee, said he has discussed some of the proposed changes with Councilman Eugene Kelleher, a retirement board member. Haas plans to cover the topic at an upcoming committee meeting and present recommendations to state legislators.
The county’s employee pension fund is valued at a new record high of $227.5 million but is still only 76 percent funded when required payments to current and future retirees are tallied, officials said.
The gap between assets and liabilities is approximately $88.3 million, Hummer said. Taxpayer subsidies have been increasing by about $700,000 annually and are projected to eat up more than $9 million of the county’s strapped general fund operating budget in 2018.
Retirement board members are now contemplating the addition of more alternative investments to boost investment returns.
