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Auditor general warns of municipal pension crisis - abc27 WHTM

Auditor general warns of municipal pension crisis

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HARRISBURG, Pa. (WHTM) -

Pennsylvania's auditor general says municipalities could be pushed into bankruptcy by rising pension costs for local police, firefighters and government workers.

Auditor General Eugene DePasquale said Wednesday that 573 out of Pennsylvania's 1,218 municipal pensions systems are distressed and underfunded.

"This is a Pennsylvania-wide problem, not a Pittsburgh or Philadelphia problem, and it is not going away," DePasquale said in a news release. "We are talking about nearly a $7 billion unfunded liability which impacts small townships, mid-sized boroughs and big cities throughout our state."

DePasquale said some pension plans are so underfunded that promised retirement commitments are at risk. He said if they fail, the cost will be passed onto taxpayers.

The auditor general said the problem is expected to get worse later this year and in 2015 when new accounting standards will make it more expensive for municipalities to borrow money and increase pension contributions.

Among his recommendations, DePasquale said municipalities should consider using defined-contribution plans for new hires and updating age and service requirements for retirement eligibility.

 

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