How are Pittsburgh’s pension investments faring?
At the most recent meeting of the City of Pittsburgh’s pension board the members received the investment report for the period ending March 31, 2019. The report shows that the total fund composite stood at $758 million. The composite is comprised of the city’s dedication of parking tax revenue ($295 million) and its invested portfolio ($463 million).
The largest class of investments for the city are U.S. and non-U.S. equities ($261 million total at the end of March) with a mixture of six other fund composites related to hedge funds, real estate and cash. Compared to March 31, 2018, the total investment portfolio grew 4.3 percent, from $443 million. The only class to decrease was non-U.S. equities which fell from $86 million to $85 million.
While we have made the recommendation that new public sector hires be placed into defined contribution plans, this has not happened yet for Pittsburgh or the other 3,000 or so municipal plans. As noted in an article on the investment performance of SERS, PSERS and other pension plans in eastern Pennsylvania, “current workers will be retiring with fully taxpayer guaranteed pensions for decades before those savings ease the cost.” Until then Pittsburgh is putting more money than is minimally required into pensions–in 2018 $36.8 million above the actuarial requirement of $49.6 million came from parking taxes ($26.8 million) and the host fee from Rivers Casino ($10 million).
The main measurement for taxpayers and citizens to watch is the funded ratio, which is simply the actuarial assets divided by the actuarial liabilities. For Pittsburgh at the end of March the combined assets of police, fire and non-uniformed plans was $758 million and the liabilities $1,299 million for a ratio of 58 percent. That is still at the moderate distress level under Act 44 of 2009.