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Pension system ‘treading water’ in Pittsburgh

By   /   December 8, 2016  /   No Comments

Pittsburgh’s pension system hasn’t gotten any worse in the last 12 years, but it also hasn’t gotten any better, despite more than $1 billion added to underfunded employee pension accounts since 2004.

“You’re putting more in each year, but you’re still not putting in enough to meet the payments going out the other way,” said Gordon Mann, director at Public Financial Managament Inc. and a member of the Act 47 recovery team. 

The city projects that, in 2018, it will be adding enough money to cover the annual payout to about 5,000 retired pensioners. However, this will use up about 25 percent of Pittsburgh’s operating budget.

Pittsburgh finance director Paul Leger said that means the city will have less money for other needs, such as infrastructure projects. “That’s the balancing act that nobody has figured out yet,” he said.

According to pension experts, part of the problem is fund managers often assume a high rate of return on investments. The assumptions don’t always pan out.

Pittsburgh’s fund managers expect a 7.5 percent return on investment, an expectation met in only seven of the last 12 years.  A recent nationwide analysis of 109 retirement systems by California-based Wilshire Accounting puts the median expected return rate at closer to 6 percent.

“All it takes is one market downturn, then all of a sudden … pension plans across the country will tank,” Pittsburgh Mayor Bill Peduto said.  

Read more here.


Erin Clark is a Florida reporter for Watchdog.org. A graduate of the University of Richmond, Clark competed on the professional tennis circuit for several years before returning to writing. Her work has been republished in national and state publications, including the Apopka Voice, Bradenton Herald, Saint Peters Blog, Florida Politics, Sunshine State News, and Townhall. Erin is a member of Investigative Reporters and Editors and the Florida Press Association.