Township Pension Plan Costs Rising In 2018

SANATOGA PA – Lower Pottsgrove’s payments to support retirement pensions for both its police and non-uniformed employees will rise next year by a combined total of about $53,000, according to its actuary, as the township makes biennial adjustments to recognize that returns on investments and wage rate increases have changed significantly.

The Board of Commissioners voted Thursday (Sept. 21, 2017) to meet 2018 minimum municipal obligation payments to the state of $240,534 for the police pension plan, and $162,401 for its regular workers. The police payment is $36,000 higher than last year, Joe Duda of Duda Actuarial Services told board members; the non-uniformed payment, $17,000 higher.

Some pension expenses will later be refunded to the township in the form of state aid.

Due to federally lowered rates, interest and other money earned on investments no longer produce 8-percent returns, Duda noted, and employees aren’t receiving big raises in an economy where the annual inflation rate is 2 percent or less. So as they were two years ago, the pension plans have again been adjusted to reflect economic reality, he said.

Duda’s calculations will affect township payments in 2018 and 2019. Township pension obligations have “trickled up” to ensure the plans have enough money to meet immediate and foreseeable payouts to retirees, he added.

It’s estimated that Lower Pottsgrove will maintain a “safe” funded pension liability of roughly 80 percent, comparable to many of its municipal neighbors. Ninety percent or higher would be ideal, he agreed, but would cost taxpayers much more. The new numbers represent “measured steps” that make adequate retirement money available at a reasonable expense, Duda said.

“It’s good to try and get the (investment return and wage) numbers down” as the board intends, Duda explained, “but you want to do it gradually so you don’t get hurt.”

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