Arbitrator rules for city's hybrid pension plan, created to hold down costs

Posted: March 21, 2012

The Nutter administration has won a significant concession on city pensions in an arbitration proceeding with the city's 2,000 prison guards.

The neutral arbitrator in the case, Richard Kasher, ruled late last week that new hires in the bargaining unit may be forced to join a hybrid pension plan, created by the city to hold down costs.

The hybrid plan provides a limited defined benefit for city employees, no more than 25 percent of the worker's final average salary, supplemented by an investment plan, similar to a 401(k). The city would provide a partial match of the employee's contributions to the investment plan, up to 1 percent of the worker's salary.

It's the same pension plan created under arbitration awards for new hires in the Police and Fire Departments, but those awards allowed the new hires to opt out of the hybrid plan, making larger contributions to stay in the old defined-benefit plan.

So far, everyone with an option has stayed with the old plan, defeating the administration's long-term goal to cut pension costs and begin to reduce the $4.7 billion unfunded liability of the city retirement system.

City officials declined to comment Tuesday on Kasher's ruling, and so far the city's representative on the three-member arbitration panel, attorney Kenneth Jarin, has not signed onto it.

It takes two-thirds of the panel to reach a decision, and the union's arbitrator, Bernard Katz, will oppose the award, according to Lorenzo North, president of Local 159 of AFSCME District Council 33.

"One of the other arbitrators has to sign it, and our lawyer is not going to sign," North said Tuesday, suggesting that the union will likely appeal the award to the courts if the city signs on.

The city's cautious reaction to Kasher's decision may be based on the wages award, which calls for a lump-sum $1,100 payment, within 30 days, to each member of the bargaining unit, to be followed by a series of 2.5 percent raises, effective July 1 of this year and next.

The award would also restore the step and longevity raises that members of the bargaining unit have earned over the last four years - step increases for each of the first five years the employee is on the city payroll, and longevity boosts for every five years that the employee continues to work for the city.

The bargaining unit includes counselors and security guards in the Youth Study Center and correctional officers working in police facilities, North said.


Contact Bob Warner at 215-854-5885 or warnerb@phillynews.com.

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