Pennsylvania State Employee Retirement Plan - DOC

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                                    Denver, Colorado 80230
                                    Phone: (303) 364-7700
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                                        www.ncsl.org


To:              The Honorable Timothy A. Williamson, Chairman
                 Special House Commission to Study All Aspects of the State Pension and
                 Retirement System
                 Rhode Island General Assembly

From:            Ronald Snell

Subject:         Requests for information from the Commission

Date:            April 4, 2008


During the questions following my testimony before the Commission on March 26, I was
asked to provide further information to the Commission on two matters:

         How often states undertake a substantial revision of their pension systems (the
          Chairman's question).
         A comparison of benefits the Employees' Retirement System of Rhode Island
          provides under Schedules A and B with those of other states (Representative
          Lewiss's question).

The answer to the first question is that states rarely undertake major revisions in their
employee retirement plans. It is unusual, in my experience, for more than one of the 50
states to enact substantial revisions in a retirement plan's structure in any given year. The
fiscal stress that many state retirement plans currently are experiencing has led, as I
reported to the Commission, to a number of states reviewing their long-range fiscal
stability in recent years; I provided the major examples. Consideration of major revisions


National Conference of State Legislatures, April 2008                                       1
this year in Maine, New Hampshire, Vermont, Rhode Island and Kentucky is
extraordinary. In the decade that I have been tracking state activity closely, I have not
seen comparable activity.

In response to the second question, I have prepared the following table and notes. Its
purpose is to compare the benefit provisions of state employee retirement plans that apply
to employees now being hired in the 11 New England and Middle Atlantic States. To
provide hard comparisons among the states, it was necessary to establish some
assumptions about age, salary, and conditions of retirement. These are the assumptions
that I used:

       The retiree has acquired 30 years of service credit in the plan in question.
       The retiree is 65 years of age (an assumption modified in the case of New
        Hampshire, as noted below).
       The retiree has been a state public employee, not a teacher.
       All the state public employee retirement systems included in this report base their
        pension calculation on the three highest years of compensation. Some require that
        those be consecutive years, which is assumed to be the case for this report.


Benefits are calculated for two levels of final average salary: $30,000 and $50,000.

For Rhode Island, benefit levels are calculated for Schedule A, in effect for state and
teacher members vested as of July 1, 2005 and for Schedule B, in effect for state and
teacher members who vested or will vest after July 1, 2005.




National Conference of State Legislatures, April 2008                                       2
                       Retirement Benefits in State Employee Plans,
                       New England and Middle Atlantic States, 2008

 State                            Annual Benefit Based on        Annual Benefit Based on
                                  Final Average Salary of        Final Average Salary of
                                   $30,000; 30 years of           $50,000; 30 years of
                                          service                        service

 Rhode Island Schedule A                   $19,800                        $33,000
 Rhode Island Schedule B                   $16,575                        $27,625
 Connecticut                               $11,970                        $20,130
 Delaware                                  $16,650                        $27,750
 Maine (note 1)                            $18,000                        $30,000
 Maryland                                  $16,200                        $27,000
 Massachusetts (note 1)                    $22,500                        $37,500
 New Hampshire (note 2)                    $15,000                        $25,000
 New Jersey                                $16,380                        $27,300
 New York Tier 4                           $18,000                        $30,000
 Pennsylvania (note 3)                     $18,749                        $31,248
 Vermont (note 4)                          $15,000                        $25,000

    Note 1. Maine, Massachusetts: State employees are not covered by Social Security.

    Note 2. New Hampshire: Benefits are calculated for an employee aged 64. A benefit rate
    reduction applies to people aged 65 and older and reduces benefits about 9 percent.

    Note 3. Pennsylvania. Figures are based on calculations in SERS Member Handbook 2007.

    Note 4. Vermont: Formula produces higher numbers; benefits are capped at 50 percent of
    FAS.




National Conference of State Legislatures, April 2008                                        3
    Sources:

    Connecticut State Employees Retirement System Tier IIA
    http://www.osc.state.ct.us/empret/tier2asumm/contents.htm

    Massachusetts Public Employee Retirement Guide
    http://www.mass.gov/perac/guide/retirementguide.pdf

    New Hampshire Retirement System Members Service Retirement
    http://www.nhrs.org/Members/serviceretirement.aspx

    New York State and Local Retirement System Coordinated Plan for Tier 3 and Tier 4
    Members
    http://www.osc.state.ny.us/retire/publications/vo1522.htm#chapter3

    Pennsylvania State Employee Retirement System Member Handbook 2007
    http://www.sers.state.pa.us/sers/lib/sers/publications/2007_SERS_Member_Handbook.pdf

    Rhode Island Employee Retirement System, Handbook
    http://www.ersri.org/public/documentation/Memb&Retire+Aug06.pdf

    Wisconsin Legislative Council, 2006 Comparative Study of Major Public Employee
    Retirement Systems. ( Madison, Wis., December 2007).
    http://www.legis.state.wi.us/lc/publications/crs/2006_retirement.pdf




National Conference of State Legislatures, April 2008                                      4


				
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