TWU attorney: SEPTA pension fund ‘at risk’

SEPTA's pension fund, which has become a key issue in the three-day-old transit strike, contained about $640 million at the end of September, down from $719 million in June, 2008.

The fund, affected by rising and falling stock markets, has rebounded from its level in March, when it was down to $471 million. But it remains well short of being "fully funded" - able to meet all potential payments to current and future retirees.

SEPTA general manager Joseph Casey said today the fund is in no danger of missing any payments to retired workers or future retirees.

Casey said the fund will require increased contributions from SEPTA to remain actuarially sound.

Transport Workers Union Local 234 president Willie Brown said Wednesday his workers would "stay out as long as it takes to secure our pension." He accused SEPTA of mismanaging the pension fund and of underfunding the workers' fund compared to the pension fund for SEPTA managers.

In negotiations, the TWU has been seeking greater contributions from SEPTA to the pension fund, and greater pension payouts to workers who retire. SEPTA has been seeking increased contributions from the workers to the pension fund, rising from the current 2 percent of base pay to 3.5 percent by the end of the proposed five-year contract.

SEPTA today released a summary of its pension financial data, which showed the pension fund for TWU workers was funded at 53 percent of full liability, as of June 1. The pension fund for SEPTA managers was funded at 65 percent.

The data showed the pension fund has never been fully funded. In 1995, the TWU fund was funded at 53 percent and the managers' fund at 88 percent. In 2000, the TWU pension fund was funded at 69 percent and the managers' fund at 87 percent. In 2005, the year of the last TWU strike, the workers' fund was funded at 61 percent and the managers at 72 percent.

Casey said the fund would eventually reach fully funded status if there were no changes in benefits payments and if the fund met its investment goal of 8 percent a year.

From 1991 through June, the fund's investment return was 6.42 percent a year. That was a decline from a year earlier: From 1991 through June 2008, the fund had earned 8.36 percent a year.

"Have we ever missed a pension payment? No," Casey said. "Is there any risk we will miss a pension payment? No."

But Bruce Bodner, attorney for the TWU, said the numbers "demonstrate exactly the point that the union has been making - they show the disparity between the support by SEPTA for the union fund and the managers' fund."

"The plan is at risk, and it has been at risk for a long time," Bodner said.

And Bodner said SEPTA's request for higher contributions from TWU members was an effort to make up for previous losses.

Casey said the TWU had offered to make increased contributions to help fund increased benefits.

"This is their pension plan. They offered this," Casey said. "I don't know what their issue is."

Bodner said the union's offer of increased contributions had been contingent on greater wage increases than SEPTA was willing to accept. Without bigger wage increases, the union was not willing to make greater pension contributions, he said.

"Every part of the contract impacts every other part," Bodner said.