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Philadelphia’s municipal pension-plan system is being hailed as a success story by city officials as it makes progress toward full funding.
In the last decade, the city’s $10 billion pension system, which supports retired city workers and their beneficiaries, has moved from 45% to 67% funded, according to Mayor Cherelle Parker.
“No shortcuts, no borrowing to mask the problem,” Parker said. “This was just steady and responsible actions.”
The higher funding percentage came from several sources, including city worker unions agreeing to revise benefit structures and increase employee contributions, and the city boosting its own annual payments, which have totaled more than $1 billion over the past decade.
Finance Director Rob Dubow said the city is on its way to fully funding the pension plan by 2032, a year earlier than previously projected.
“We need to get to 100% funded. The good news is that our actuary believes we will get to that 100% funded level within seven years,” he said.
Once the city’s pension obligation is fully met, Dubow said “hundreds of millions” of dollars each year will be allocated for other purposes.
Parker said those purposes could be increased city services or more employee benefits, which could be negotiated during contract talks with their unions.
The city’s pension board was also commended for investing city pension dollars — so well, in fact, that there is $45 million that can be given to those currently receiving a pension, according to Parker.
“The result of their management and leadership, the result is $45 million going directly to the men and women who dedicated their careers to serving the city of Philadelphia,” Parker said.