HARRISBURG — The good news for Pennsylvania taxpayers is that better-than-expected investment returns have brightened the financial outlook for the state's two large public-sector pension plans.

But the healthy returns in recent years also have increased pressure on the Legislature to expand benefits, by either providing cost-of-living increases for retirees or offering early retirement incentives for state workers or teachers.

The $32 billion State Employees' Retirement System, which covers state workers and some quasipublic entities such as Penn State, recently announced that a robust 16.4 percent return on investments last year has significantly lowered the size of a projected 2012 jump in taxpayer costs.

The Public School Employees' Retirement System has also been on a Wall Street winning streak. Its year-end figures won't be available until July 1, but since just last December its assets have grown from $62 billion to $65 billion.

"We have seen consistently for the last couple years now that the income return has been rather high," said state Rep. Peter J. Daley II, D-Washington, sponsor of bills to let some state workers and teachers retire early at full benefits. "Hopefully that will alleviate some of the fears of the naysayers who think this is going to help collapse the system."

Sixty-eight bills that would affect public-sector retirement plans have already been introduced this session.

One that might be voted on by the full House within days would require the state and other "employers" in the state government pension system to contribute a minimum of 4 percent of workers' pay into the system. Such a contribution "floor" is designed to mitigate against the swings in taxpayer costs that can result from the ups and downs of the market.

Another measure, sponsored by Sen. Jane Orie, R-Allegheny, would require voters to approve benefit upgrades in either pension system, although cost-of-living adjustments would be allowed as long as they are affordable.

There are proposals to study selling off pension fund holdings from countries that do business with Sudan because of the atrocities in Darfur, and to prohibit investments in countries that sponsor terrorism.

Other proposals include establishing a defined-contribution plan, similar to a 401(k), and changes in eligibility rules, particularly for police officers. Gov. Ed Rendell's administration is working on its own solution to the pension challenges. Rendell wants to meet this summer with lawmakers "with the aim of developing a consensus and adopting legislative changes after that," according to Budget Office spokeswoman Susan Hooper.

Hooper said proposals to widen benefits are premature until the cost spike is addressed. Last year, before the most recent stock gains were evident, the pension systems had projected that the cost to subsidize the systems would triple to $3 billion a year in 2012 and that the higher payments would continue for decades.

Bob Gentzel, a spokesman for the state employees' pension system, said legislative leaders also appear cautious about any benefit expansions that might exacerbate the spike.

"While the situation has improved, and the ... rate projections are coming down, there still is an increase in rates to be dealt with and great concern about not making the situation worse," he said.

Rep. Steve Nickol, R-York, a member of the teacher pension board and co-sponsor of the bill to require a contribution floor in the state workers' pension fund, said he is sensing pressure from school retirees to give them a cost-of-living adjustment.

Both pension systems took a beating when the tech-stock bubble burst in the late 1990s. At about the same time, the Legislature committed taxpayers to guarantee a substantial expansion in public-sector retirement benefits — including a 50 percent rise in most lawmakers' pensions.