In Philadelphia, more pensions are handed down

Philadelphia is paying about 22,000 city pensions to retirees, and more than 8,000 additional pensions, mostly to widows (6,700), also children and other beneficiaries named by pensioners. Put another way, for every 10 retirees collecting, there's another 4 pensions going to people who didn't personally earn them, as city law allows. See data at http://www.phila.gov/pensions/PDF/PHILARBP_2015%20AVR_032516s.pdf, pp. 56-57.

Meanwhile, Pennsylvania SERS, the state workers' pension system, is paying 102,000 pensions to retirees, and just 10,000 to beneficiaries and survivors. That means that, for every 10 retirees collecting pensions, there's less than 1 beneficiary also collecting. See data at http://www.sers.state.pa.us/pdf/CAFR/2014_SERS_CAFR.pdf, pp.100 and 104.

Beneficiary pensions are mostly smaller than retiree pensions. Measured by cost, about $1 is paid to some other beneficiary, for every $15 paid to a retired worker. For Philadelphia, it's about $1 paid to beneficaries, for every $7 paid to retirees. (Both systems face future payments far in excess of the money they have set side for pensions, requiring larger and larger taxpayer subsidies over the years; every dollar counts.)

Why the difference? Philadelphia is more liberal in who it allows to collect? Or are Philadelphia pensioners more likely to be dead, leaving their spouses, kids or other beneficiaries to collect? Or is it easier to get named a beneficiary in Philadelphia?

Fran Bielli, executive director of the Board of City Pensions, says Philadelphia's limits on beneficiary and survivor benefits aren't unusual. I hope to get more detail from the system's fiduciary consultants at Cheiron, who publish a 126-page annual report best translated with reference to the city's pension code, and who do enough work for other systems that they can make useful comparisons.

Municipal pension systems aren't covered by ERISA, the law governing private-sector pensions, so there is surprising variation in the ways these plans report.