Philadelphia has only 47 percent of the money it needs to meet its pension obligations.
Philadelphia’s underfunded pension system impedes long-term economic growth and competitiveness, according to the city’s fiscal oversight board.
The Pennsylvania Intergovernmental Cooperation Authority’s recently released report says Philadelphia has only 47 percent of the money it needs to meet its pension obligations and about 15-percent of the General Fund is projected to go towards pension obligations this year.
The report says Philadelphia already has baggage that makes it less competitive with other cities, and the growing amount of general fund dollars needed to cover pension costs will only make it worse. The Authority’s chairman, Lawrence Tabas, said the demand for pension dollars shrinks funds for other services.
“That’s less dollars for the disadvantaged and the poor, for healthcare, for job training programs, for general assistance to repair roads and streets, less police protection, the whole gamut,” Tabas said.
According to Pennsylvania’s Auditor General, 562 municipalities are considered distressed in the state, underfunded by $7.7 billion. Of that, $5.3 billion is from Philadelphia alone.
The report recommends Philadelphia increase employee contributions, seek dedicated funding sources, make more conservative assumptions for investment returns, and require new hires to join a hybrid defined-benefit and defined-contribution plan that’s less risky for the city.
But Tabas said finding solutions isn’t always the hard part. “We actually have a fair amount of consensus on some potential solutions,” he said. “But I don’t know if the political will is there to do anything about it.”