The city of Pittsburgh's already-troubled pension fund has lost ground during the stock market swoon, dipping from $385 million at the beginning of the year to $261 million at the end of November, according to figures released today.
The fund should ideally contain $899 million to cover the payments ultimately due to retirees and current employees once they retire. The fund now has 29 percent of what it should have -- a level that long-time observers said was the worst in a decade.
"We're going to need help from Harrisburg," said Mayor Luke Ravenstahl, after a two-hour meeting in which city officials changed investment assumptions, began to reshuffle portfolio managers, and voted to put around $6 million more than required per year into the beleaguered pension fund.
He issued a letter to legislators outlining a four-point plan, recently endorsed by the Pennsylvania League of Cities and Municipalities Board of Directors. It would change the formula for distributing state aid to municipalities; create incentives for pension pools to merge; provide assistance in creating new defined contribution retirement plans; and outlaw the practice of artificially depressing pension pools to capture state aid.
The city's pension fund board voted to create, by early next year, options for new non-union employees who might want to put retirement money into a stock portfolio, rather than the pension fund.
None of that will alter the health of the pension fund in the short term.
Because the fund pays out $6.7 million a month, it needs to earn around 10 percent on its investments just to break even. Instead, it has lost around 25 percent this year.
"The Pittsburgh plans have actually come through this rather well," said Jeffrey Boucek, a principal with Mercer Investment Consulting, which guides the city's pension fund. "We're in unprecedented times in a lot of ways."
More details in tomorrow's Pittsburgh Post-Gazette.