Lawmakers weigh future costs of cutting payments to Pa. pension funds

    Directors of Pennsylvania’s two public pension funds have outlined the costs of implementing the clearest piece of Gov. Tom Corbett’s proposal to address a continually escalating debt of $45 billion.


    Corbett has offered a plan to pare state payments into its public pension systems in order to free up funds for other government programs.

    But lowering the state payments, known as collars, would result in significant costs down the road, said David Durbin, executive director of the State Employees Retirement System.

    “Tapering of the collars or the reduction of the collars winds up costing an additional … $1.7 billion on our side,” he said.

    The cost of deferring contributions into the school employees pension fund is estimated at another $3 billion.

    The estimates underscore why it’s a bad idea in the absence of corresponding changes in the pension systems, said Rep. Bill Adolph, R-Delaware, who serves as chairman of the House Appropriations panel.

    “I think the one thing that we all agreed on today is that lowering the collars is also a method of increasing the debt unless you had a coinciding reform or something that helps the system down the line not to pay out as much as they are currently,” he said.

    The Corbett administration is considering an overhaul that would generate $7.4 billion in savings for the commonwealth over 30 years, officials said, more than enough to cover the costs of lowering collars. The plan has been broadly outlined as a hybrid of the traditional defined-benefit pension and a 401(k)-style plan.

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