How the pension fund figures in SEPTA strike

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 yesterday that the fund was in no danger of missing payments to retired workers or future retirees. He said it would require increased contributions from SEPTA to remain sound.

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

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

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

The data showed the pension fund has never been fully funded. In 1995, the TWU fund was at 53 percent and the managers' fund at 88 percent. In 2000, the TWU fund was at 69 percent and the managers' fund at 86 percent. In 2005, the year of the last TWU strike, the workers' fund was at 61 percent and the managers' fund at 72 percent.

Casey said the fund would eventually be fully funded if there were no changes in benefits payments and if it met its investment goal of an annual 8 percent return.

From 1991 through June, the annual return was 6.42 percent. That was down from a year earlier: From 1991 through June 2008, the fund 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.

He 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," he 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 raises, the union is not willing to make greater pension contributions, he said.

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