Pennsylvania won’t take over Pittsburgh’s pension system because the plan can pay 62% of its promised benefits, a decision that will forestall higher city payments.
Had the Pennsylvania Public Employee Retirement Commission, which met Monday, deemed the system less than 50% funded, the $1.6 billion Pennsylvania Municipal Retirement System, Harrisburg, would have taken it over, as required by state law. That might have meant higher costs.
To prevent loss of control, the Pittsburgh City Council in December pledged $736 million in parking revenue through 2041 to the pension fund. As a result, the system’s assets hit $632 million, said James McAneny, executive director of the commission, who cited figures from the fund’s custodian, PNC.
“This is extremely good news for the people of Pittsburgh,” Mayor Luke Ravenstahl said in a statement. “This is a critical step for us as we get closer to completing our financial recovery.”
Pittsburgh, the state’s second-largest city, is among municipal governments facing gaps between assets and obligations to workers. National estimates on unfunded liabilities vary depending on assumptions and range from $700 billion to more than $3 trillion.
Standard & Poor’s in April revised its outlook on Pittsburgh debt to negative from stable because of the rising financial pressures tied to the pension system.
Rob Kozlowski contributed to this story.