The city's proposed changes to pensions for new hires could come sooner than expected.

Philly's underfunded pension plan is expected to soon be declared "severely distressed" by the Pennsylvania Employee Retirement Commission. Once that happens, the city is required to set up a lower-cost pension program for new hires.

After the declaration, if union contracts have expired, the city will move to immediately set up a new pension program, City Solicitor Shelley Smith said yesterday.

"Once the contracts have expired, we plan to implement [the pension plan] if the fund is declared distressed, pursuant to the statute," Smith wrote in an e-mail.

Contracts with the city's four municipal unions expire June 30. The state rules for distressed pensions say that a municipality can set up a new pension program first and negotiate with bargaining units afterward.

Pete Matthews, president of District Council 33 of the American Federation of State, County and Municipal Employees, which represents the city's blue-collar workers, said yesterday that he wasn't aware of the rules that would allow the city to impose pension changes immediately.

Under the proposed plan, new workers would receive a pension at a lower benefit than current employees and would have the option of paying into a 401(k) program. Nutter yesterday submitted legislation on the plan to City Council to change city law.

Under current city rules, reforms to the pension program require a change to city law, as well as approval from the unions. *