Almost a year ago, to the date, we wrote that efforts in the General Assembly to amend the retirement system for Allegheny County had died. Back in May, when the legislation passed one chamber we wrote of the proposal again.
In the waning days of 2013 the proposal has passed both chambers although there are differences in the versions (summaries here and here) that will need to reconciled if the legislation is to move forward.
It appears from the summaries that while one version completely eliminates overtime from pension calculations another does so only for overtime pay that is in excess of ten percent of base pay. All other changes—on the length of time to vest, length of service years, and the period over which final average salary is calculated—appear to be the same.
From that change the impact of the County’s payments to the pension system as new hires working under the new benefit tier replace those that work under the current guidelines. With no overtime allowed, by year five of the implementation (based on 2012 payroll) the County’s normal cost would decrease by $2.440 million; if new employees were allowed to take 10% of their base pay in overtime into the pension calculation the decrease would be $2.067 million, a difference of $373,000. As the years go on the County’s normal cost would fall but the difference in savings between “no overtime” and “some overtime” would approach $2 million per year by year 15.
