Pension Protectionism?

Pension Protectionism?

Was part of the motivation for avoiding a state takeover of the City’s pensions to preserve the jobs of the employees that handle those pensions? We may never know for sure, but a newspaper article over the weekend certainly had to raise some questions about that possibility.

To begin with, the piece pointed out that with twelve total employees, administrative costs, and separate attorneys the City’s pension system (a system that contains three separate plans for police, fire, and non-uniformed employees) is much larger than the office function at Allegheny County, a system with 7,300 actives to Pittsburgh’s 3,300 actives.

The City Controller, who was instrumental in putting together an alternative aimed at avoiding a state takeover, was more pointed in his view of the matter: "I don’t know that we need four lawyers [advising on the city pensions]…That doesn’t make a lot of sense to me…The city’s [pension] situation is so serious that every effort to contain costs has to be looked at. We’ve got to have more consolidation of those staffs."

If the City is to be taken over-it is still a possibility once the actuarial numbers of the New Year’s Eve plan are put together that the "infusion of value" did not meet the minimum 50% funded ratio-it will end up going to the PA Municipal Retirement System (PMRS). PMRS has 26 total staff members administering over 900 plans from various municipalities with 8,400 active employees. The total assets are valued at $1.5 billion. They would assume control over the City’s three pension plans with $339 million in assets. While the head of Pittsburgh’s fire union (who is also on the City’s pension board) intimated that the City pensions require attention seven days a week, a PMRS staffer covers 323 actives while a Pittsburgh pension employee covers 277. The administrative cost comparison, as much as can be derived from the article and PMRS financial statements, is slightly in favor of the latter at $380 per active to $391 per active in Pittsburgh.

Nevertheless, PMRS and the state will have some time to think about how they could handle Pittsburgh’s plans should that come to pass. But they won’t get any help from the City, since the article noted "the city’s Comprehensive Municipal Pension Trust Fund board…met [last week] but did not release a year-end balance for the fund, for fear that any figures released might be used to justify a state takeover of the city’s pensions". Whose best interests are at heart in this scenario?