Thursday, July 30, 2015

Phila city pension plan broke by 2015? Update

Northwestern U finance prof Josha Rauh says Philadelphia's pension plan is the worst-funded of 77 big-city plans he and his fellow scholars reviewed.

Phila city pension plan broke by 2015? Update

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Just as Mayor Nutter is campaigning to freeze Philadelphia's expensive guaranteed police-fire-public worker pension plan and replace it with a no-guarantees savings-investment plan, a  study led by Joshua Rauh at Northwestern University rates Philadelphia's plan as the least-solvent of 77 big-city pension plans, and says it could run out of cash by 2015. Summary and link to report here Bloomberg story here.

Survey doesn't include Pittsburgh's plan, which was in even worse shape than Philly's, last we checked...

UPDATE: Rauh tells me the 2015 drop-dead date isn't guaranteed. It could happen that fast, IF U.S. investment markets flatten. Or IF city drastically cut pension "contribution" subsidies, which isn't in anybody's budget plan.

But even if the fund meets the city's targets, Rauh says the fund will still run down "in a few more years"; he thinks current city employees "need to be told" their payments are funding today's retiree checks, not setting aside money for their own.

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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