City Controller’s latest Municipal Money Matters report reviews latest pension fund outlook
FOR IMMEDIATE RELEASE: Jan. 15, 2025
PHILADELPHIA – City Controller Christy Brady today released the latest monthly Municipal Money Matters report that indicates the City of Philadelphia’s $12.8 billion Municipal Pension Fund is on track to be fully funded by 2033.
The City, along with the municipal workforce, and the Executive Board and staff of the Pension Board, implemented reforms to the pension fund over the last seven years. This included adopting the Revenue Recognition Policy, an alternative funding that requires contributions to exceed the city’s Minimum Municipal Obligation.
As a result of these reforms, the funding level of the pension fund increased from 49.7% in 2019 to 62.2% at the beginning of Fiscal Year 2024, which is the latest valuation available. The fund is projected to reach 80% by 2028 and achieve full (100%) funding by 2033.
“The City has made significant strides in securing the financial stability of its Pension Fund,” said Controller Brady, who is also a member of the Pension Board. “A healthy pension fund is an essential commitment to the City’s current and future retirees and a key factor in attracting and retaining talented employees.”
The fund’s growth can also be attributed to positive investment returns and other measures taken by the Pension Board (Board). In Fiscal Year 2024, the Board delivered an 8.7% return, exceeding the assumed rate of return of 7.35%.
The Pension Fund pays an average of $72 million per month and approximately $877 million annually to its current retirees. In Fiscal Year 2024, the City of Philadelphia’s contribution to its Pension Fund was $742.8 million, which is about 12% of the City’s General Fund expenditures.
In addition, the Pension Fund receives three sources of anticipated additional revenue:
- A portion of sales tax revenue,
- Additional tiered member contributions based on salary levels for current and future municipal employees, and
- Additional member contributions for current and future members in Plan 87 for Police and Fire.
“The benefit to Philadelphia’s taxpayers is significant: as the funding level rises, the City’s required contributions to the pension fund decline, freeing up resources to invest in other initiatives,” said Controller Brady.
Visit https://controller.phila.gov/ to view the City Controller’s latest report.
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