One cannot understate the sheer size and impact of the three local pension plans administered by the City of Philadelphia. Taken as a whole, the local (municipal, authority, and association) system in Pennsylvania, as of 2015, covers 73k active members, has $16 billion in assets, $24 billion in liabilities, and a funded ratio (assets/liabilities) of 66%. Remove Philly and the local system would have 46k actives, $11.5 billion in assets, $13 billion in liabilities, and a funded ratio of 84%.
It is that 80% or so level that Philadelphia is aspiring to (it is currently 45% funded) hoping to get there in 14 years. But the plans took a $146 million loss last year as reported this week. The pension board voted to lower the rate of return assumed on investments to 7.7%. As we noted last year Pittsburgh, with a lower rate of return assumption currently, is thinking about an adjustment in 2018.
Compared to 1985, which was prior to a new benefit tier for employees of the city referred to as “Plan 87” the City of Philadelphia had 32,517 active employees and its funded ratio was around 38% with assets of $1.0 billion and liabilities of $2.8 billion.
