Declare local variables in PostgreSQL?

There is an almost identical, but not really answered question here.

I am migrating an application from MS SQL Server to PostgreSQL. In many places in code I use local variables so I would like to go for the change that requires less work, so could you please tell me which is the best way to translate the following code?

-- MS SQL Syntax: declare 2 variables, assign value and return the sum of the two 
declare @One integer = 1
declare @Two integer = 2
select @One + @Two as SUM

this returns:

SUM
-----------
3

(1 row(s) affected)

I will use Postgresql 8.4 or even 9.0 if it contains significant fetaures that will simplify the translation.