Pittsburgh’s $672 million Comprehensive Municipal Pension Trust Fund made money last year, but its liabilities increased because of a change in expected investment returns.
The fund grew by about $23.6 million from 2013 to 2014, but the liability increased nearly $148 million during that period. As a result, the fund slipped from 64 percent funded to nearly 58 percent funded, said city Finance Director Paul Leger, also executive director of the pension fund.
Former Mayor Luke Ravenstahl convinced the retirement board to lower its projected rate of investment return from 8 percent to 7.5 percent, which increased the fund's liability.
“I am not of the opinion that we are doing poorly because we’re not,” said Mr. Leger. “We’re doing well, it’s the market that’s not doing as well as I want it to. We’re at the whim of the market just like any other investor.”
The pension fund’s performance has varied wildly over the past six years, from a negative 25 percent return in 2008, the year of the global recession, to a high of more than 20 percent in 2013. Last year, the rate of return was about 9.2 percent.
Pittsburgh’s funds for retired police, firefighters and other municipal employees, combined into the Comprehensive Municipal Pension Trust Fund, are considered “moderately distressed” by the state Public Employee Retirement Commission. The size of its unfunded liability, about $490 million in 2014, is second only to Philadelphia statewide.
A 2010 deal that transferred parking revenue to the pension fund prevented a state takeover, and the city pledged an additional $11 million to the fund in 2015 to boost the funded portion.
“One hundred percent is the goal,” Mr. Leger said. “Seventy-five percent would make us very happy.”
Correction (posted March 4, 2015): An earlier version of this story incorrectly characterized Former Mayor Luke Ravenstahl’s recommendation to the retirement board.
Robert Zullo: email@example.com, 412-263-3909 or on Twitter @rczullo.