HARRISBURG, Pa. — A movement is underfoot in Pennsylvania to consolidate hundreds of the state's police pension plans and billions of dollars in assets into the $30 billion Pennsylvania State Employees Retirement System.
The state's Public Employees Retirement Commission, Harrisburg, will formally introduce a proposal to the Pennsylvania House of Representatives later this month that calls for PennSERS to absorb the state's 970 police pension plans, which have a combined $4 billion in assets under management.
The plan would establish a centrally administered statewide retirement system for Pennsylvania's police officers, which would combine its assets and investment management responsibilities with PennSERS to create a new system known as the Pennsylvania Government Employees' Retirement System.
At the heart of the proposal, retirement commission members argue, is the lackluster investment performance of what a commission report calls "fragmented" and "inefficient" municipal retirement systems.
Collectively, these plans do not have the same level of investment resources and expertise as PennSERS, said Anthony W. Salomone, executive director of the commission. As a result, he said, PennSERS' investments have significantly outperformed the police pension plans. The police plans' underperformance, Mr. Salomone said, has cost the police funds millions of dollars in lost investment income.
Pennsylvania's police pension plans, minus the City of Philadelphia Municipal Retirement System, produced an average rate of investment return of 3.9% in alternate calendar years beginning in 1996 through the end of 2002, according to the report from the retirement commission. (Pennsylvania municipal pension plans file actuarial reports every other year.)
During the same period, PennSERS' average rate of return was 5.9%, the report said.