Pennsylvania Won’t Take Over Pittsburgh’s 62%-Funded Pension
Pennsylvania won’t take over Pittsburgh’s pension system because the retirement plan can pay 62 percent of its promised benefits, a decision that will forestall higher city payments.
Had the Public Employee Retirement Commission today deemed the system under 50 percent funded, the Pennsylvania Municipal Retirement System would have taken it over, as state law requires. That might have meant higher costs.
To prevent loss of control, the City Council in December pledged $736 million in parking revenue through 2041 to the pension fund. As a result, the system’s assets hit $632 million, said James McAneny, executive director of the retirement commission, who cited figures from the fund’s custodian, PNC Institutional Investments.
“This is extremely good news for the people of Pittsburgh,” Mayor Luke Ravenstahl said in a statement. “This is a critical step for us as we get closer to completing our financial recovery.”
Pittsburgh, the state’s second-largest city by population, is among municipal governments facing gaps between assets and obligations to workers. National estimates on unfunded liabilities vary depending on assumptions and range from $700 billion to more than $3 trillion.
Standard & Poor’s in April revised its outlook on Pittsburgh debt to negative from stable because of the rising financial pressures tied to the pension system.
To contact the reporter on this story: Romy Varghese in Philadelphia at rvarghese8@bloomberg.net
To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net
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