The Auditor General was in town this week to release his most recent audit of the City of Pittsburgh’s pension plans. The audit period covered 2012 through the end of 2013; right at the end of the audit period (in December 2013) is when the pension trust board decided to lower the projected rate of return on investments from 8% to 7.5%. The previous audit, released in 2013, covered the period right after (in December 2010) the City opted to make a three decade pledge of parking tax revenue to the pensions. What monumental decision can we expect to happen when the next time the AG releases a Pittsburgh pension audit?
If the AG’s suggestions were taken up, we could see municipal pensions consolidated, length of service or retirement age raised for new hires, the elimination of overtime counted in pensions, etc.
How would that play out in Pittsburgh? Right now, police officers have to reach age 50 and have 20 years of service to retire with 50% of their base salary averaged over the final 36 months prior to when they retire. Firefighters have to work for 20 years or reach age 50, which ever comes later, to receive 50% of the average monthly wages of any 3 calendar years of their employment, or the final 36 months prior to retirement.
So what could be altered to apply to new hires? It could be any combination of retirement age, years of service, or final average salary calculation. There have been changes made in the past. For example, the police final average salary calculation was altered for those hired after 12/31/91–prior to that it was a 12 month basis. Firefighters hired since 1976 have the age and service thresholds, but prior to the Bicentennial year employees had to work for 20 years to qualify for normal retirement. Note too that firefighters’ pensions are calculated on “average monthly wages” which means overtime can be counted, while police have base salary counted.
