With the announcement today that Allegheny County is going to retain the services of its current provider of health care through 2015 it is worth taking a brief moment to look at the changes that will affect the County’s retirement system in this year, the next, and those going forward.

As we pointed out near the end of last year the General Assembly made changes to the Second Class County Code to provide that new hires of the County would have new terms of pension benefits.  Under what became Act 125 of 2013, new hires will have to work 25 years instead of the present 20 to receive full retirement benefits, have a longer period to calculate final average salary, and only be able to count a portion of overtime earnings (10% of base pay) in pension calculations.

In addition, the County’s retirement board acted late in the calendar year to increase the contributions paid by the County and the employees of the County to 8.5%, a half of a percentage point boost above the 8% rate that became effective for 2012.  The County matches the rate of employees, and a boost in one means a boost in the other (the total combined employer/employee rate is now 17% for 2014).  Contributions to the pension system by the County and its employees (in nominal terms) have risen from $37 million in 2008 to $54 million in 2012 according to the most recent audit.