Highest funded level in two decades

PHILADELPHIA – The City of Philadelphia and the Philadelphia Board of Pensions & Retirement announced Thursday that the City’s Pension Fund has surpassed 60 percent funded. The improved health of the fund is the result of a partnership among the Board, mayoral administrations, unions, City Council, and State legislators. This marks the Pension Fund’s highest funding percentage since 2003 – 21 years.
 
As a result of changes ranging from altering pension benefit structures to increasing contributions to the Pension System, the funded percentage has jumped from under 45% to over 60% in seven years. The progress was reported in a Preliminary Actuarial Report provided by Cheiron, the Fund’s outside actuary. The report also showed the Fund would get to 80% funded by FY29 and 100% funded by FY33.
 
“I am very pleased with the progress we are making and will continue to make to increase the health of the Pension Fund for the dedicated retirees of our city government,” said Mayor Cherelle L. Parker. “Thank you to the Board, City Council members, our municipal unions, the City Controller, and other stakeholders for their continued efforts towards a fully-funded Pension Fund.”

“I look forward to continuing to work with the Board, the Mayor, City Council, the municipal unions, and all stakeholders to continue the improvement of the fund,” said Francis Bielli, Executive Director, Philadelphia Board of Pensions & Retirement.
 
“I am happy with the way the fund has grown,” said Carol Stukes-Baylor, Vice-Chair, Philadelphia Board of Pensions & Retirement. “Thanks to the Board trustees, mayoral administration, unions, City Council, State legislators and members of the Fund for their support in helping Philadelphia’s future.”
 
“The hard work and dedication shown by the administration, the unions, and the Board has led to this remarkable increased funding level,” said Christy Brady, City Controller. “I look forward to continuing this positive progress on the road to being fully funded.”
 
The Road to Pension Recovery has three main components:

• Dedicating additional assets to the fund — by increasing contributions to the Fund made by the City and its employees, as well as a portion of the Sales Tax, the Fund is better positioned to withstand the ups and downs of the stock market. These contributions are made in addition to what the City is required to annually contribute and therefore pay down the unfunded liability more quickly.
• Reducing the rate at which future liabilities grow — the City and union negotiators agreed to create a new mandatory “stacked hybrid” plan for new, non-uniformed employees that is less costly to the Fund in the long term.
• Reducing the plan’s risk profile — the Pension Board has made changes in the way the assets are managed, including shifting to assets that have lower fees and are less volatile, while also making plan assumptions more conservative.

In 2020, the Government Finance Officers Association (GFOA) awarded the City of Philadelphia the 2020 Award for Excellence in Government Finance for the City’s comprehensive pension reform plan.