Commonwealth Foundation Examines PA Pension and Retiree Medical Liabilities

Member Group : Commonwealth Foundation

NEWS RELEASE from the Commonwealth Foundation

HARRISBURG, PA — The Commonwealth Foundation today released A Tale of Three Cities: Pennsylvania’s Retiree and Medical Liability Challenges, a policy brief by senior fellow Richard C. Dreyfuss that spotlights the financial missteps by Philadelphia, Pittsburgh and Allentown in the administration of those cities’ municipal pension plans.

Dreyfuss, an actuary and pension expert, offers prescriptions for putting Pennsylvania’s public pension and retiree health care plans on long-term financial footing without burdening current and future generations of taxpayers.

The Commonwealth maintains over 3,000 public pension plans at the state, city and municipal levels, the most of any state and approximately 25 percent of all such plans in America. Over 2,200 of these plans are known as "defined-benefit," which are financially and politically problematic compared to the "defined-contribution" plans prevalent in the private sector.

The brief states that meaningful reform of public pension and retiree health care must make taxpayer costs current, affordable, and predictable. Specific policy prescriptions include:

1. Creating a single defined-contribution pension plan for all new public employees in all layers of government in Pennsylvania, which is ineligible for state subsidies and funded with six percent of enrollees’ gross compensation.

2. Requiring existing pension and retire health care plans to fund their liabilities calculated under Government Accounting Standards Board Statement 45 (GASB 45) over the working lifetime of enrollees.

3. Benchmarking retiree health care plan design and enrollee premium contribution levels to common practices within the entire Pennsylvania labor market.

"The unfunded liabilities in Pennsylvania’s public pension and retiree health care plans present a serious financial challenge that will fall squarely on the shoulders of the next generation of taxpayers unless the solutions presented in this policy brief are implemented soon," said Matthew J. Brouillette, Commonwealth Foundation president and CEO.

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EDITOR’S NOTE: The policy brief, A Tale of Three Cities: Pennsylvania’s Retiree and Medical Liability Challenges, is available online at and by calling 717.671.1901.

The Commonwealth Foundation ( is an independent, non-profit public policy research and educational institute based in Harrisburg, PA.