Public Employee Pensions

By Fred Wright, President AFSCME District Council 47

Over the last few weeks, there have been articles written about public employees’ pensions and the existing underfunded liability costs. First, let’s put the underfunded liability in perspective, so that the average person can understand the union’s frustration with this fiscally irresponsible situation.

Imagine that you and your family brought a home with a  30-year mortgage. For over 25 years, your family paid your mortgage at the contractually agreed upon interest rate. However, after over 20 years the financial institution notifies you that they (not you) did not make sound investments or pay their mandated fees to the government. Now, the home that you have been purchasing for over 20 years will not be yours, at the initial contractually agreed upon price.

The Philadelphia Pension fund was last fully funded in 1950, and funding remained solid through the 1990’s. When the pension fund was first established, the actuaries calculated what contributions would be necessary for both the City and the employee for the fund to be viable. As we are all aware, the employees’ contribution were mandated through payroll deduction and made regularly, the City’s contributions were obligations that were set aside for various reasons by several administrations. So now we have a problem that’s not the fault of the employees of the City of Philadelphia.

Our union and other municipal unions stepped up to the plate each and every time that we had to save our defined benefit pension plan. We modified plans (Plan J to Plan Y). In our current contract, we agreed to contribute an additional one percent of salary. But to some, that is not enough. Instead of alternatives such as Council President Clarke’s where the City will designate one-half percent of the additional sales tax to fund the pension plan, there are cries to change the plan to a hybrid without any discussion, collaboration or research involving the affected municipal unions.

It would have been easy for us to support and advocate for the sale of the Philadelphia Gas Works. The Nutter administration said the sale would have put $500 million towards the unfunded liability.  We viewed that as self-serving and detrimental not only to the gas workers, but also the public at-large, who benefit by having a publicly-owed utility.

We ask the public to think in our terms, think of that home you purchased 30 years ago. Let’s demand real integrity from our government and for them to stand true to their obligations.ears ago. Let’s demand real integrity from our government and for them to stand true to their obligations.