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FOR IMMEDIATE RELEASE |
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State
Rep. Matt Smith |
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Smith proposal would reform Allegheny Co. retirement fund, save millions
PITTSBURGH, March 26 – State Rep. Matt Smith, D-Allegheny, has reintroduced legislation that would help the Allegheny County Pension Fund reduce its costs and remain actuarially sound.
The proposed Allegheny County Pension Preservation Act was the subject of a House Finance Committee hearing today in Pittsburgh. Smith told the committee that his proposal (H.B. 566) would reform the county's retirement benefits system and save the county millions of dollars over the next 25 years and beyond.
House Bill 566 would exclude overtime pay when calculating retirement benefits for all new employees hired or re-employed by the county after the effective date of the proposal, if it becomes law. The bill would also change the way retirement benefits are calculated for new employees, calculating their final average salary based on their average monthly compensation during the highest 48 months of the last 8 years of employment, or the last 4 years if they are compensated on a bi-weekly basis.
"When combined, these two reforms would gradually reduce the retirement system's costs as new employees are hired and current employees retire, allowing the retirement fund to remain sustainable for decades to come," Smith said. "This proposal places the fund on an actuarially sound path and protects our commitment to current plan beneficiaries."
According to an actuarial projection done last September, Smith's proposal would save the plan approximately $634,000 each year after 5 years; $1.5 million each year after 10 years; $2.7 million each year after 15 years; and $4.3 million each year after 20 years. The plan savings would be shared equally between the county and members. The measure would result in a total cumulative actuarial savings of $18 million to the county and $18 million in member matching contributions for a total of $36 million.
Smith emphasized that his proposal would only apply to new employees hired on or after the effective date of the law, and current employees of the county would not be affected.
As of January 2008, Allegheny County employed 7,325 people with a payroll of approximately $286 million. Membership in the county's defined benefit pension plan is mandatory for all county employees. Retirement benefits are equivalent to 50 percent of an employee's final average salary, which is calculated as the monthly average of the highest 24 months of compensation – including overtime pay -- earned during the last 48 months of service before retirement.
House Bill 566 awaits further consideration by the House Finance Committee.
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