Pension Fund

As the doomsday clock ticks down on Philadelphia and its financial woes, certain political elements are attempting to raid the municipal employees' pension fund to bail Philadelphia out of its economic crisis. After last month's elections, city residents looked with hope toward the proposal coming from several state legislators. Unfortunately, the plan presented several financially unsound options. In private enterprise, as it should be with the city, current assets (i.e. tax revenues)

HARRISBURG - Pennsylvania's mammoth retirement fund for teachers and other school workers is on sounder footing thanks to a 14.6 percent return on its investments for the year that ended June 30. The Public School Employees Retirement System said Monday that its investments added more than $6 billion over that year and far exceeded the 8 percent assumed rate of return. But the fund is averaging only about 3 percent for the last five years, and 3.5 percent over the last decade. It serves nearly 280,000 active employees and 179,000 retirees.

New Jersey's top fiscal officer says the state will make a payment of a half-billion dollars to the pension fund when the law requires. Gov. Christie has proposed paying the $506 million early, but only if the Legislature agrees to raise the retirement age and require workers to pay more toward their pensions. Treasurer Andrew Sidamon-Eristoff told a Senate budget panel Monday that the administration intends to make the payment required in the 2012 fiscal year even if changes are not made.

Resolving the most quarrelsome aspect of its bankruptcy, the Philadelphia Orchestra Association has settled with the national musicians' pension fund that had threatened expensive and time-consuming litigation over the orchestra's withdrawal from the fund. The American Federation of Musicians and Employers' Pension Fund (AFM-EPF), which had filed a $35 million claim in the case, will drop all its legal challenges in exchange for $1.75 million from the orchestra. The development allows the orchestra to approach bankruptcy Judge Eric L. Frank with an uncontested reorganization plan, which means - if the orchestra can wrap up talks with the Kimmel Center over a new lease - that it could be out of bankruptcy within 90 days.

A former Upper Providence councilman has questioned the township's projected $210,000 contribution to the employee pension funds, an amount that is more than double this year's budgeted figure of $98,203. "What's wrong with the pension fund?" Bob Williams asked several times at the meeting last Thursday. "Why should the taxpayer have to foot the bill?" The township has filed a lawsuit against the former pension fund administrator, Robert J. Kuss & Associates of Blue Bell, Pa. Township Solicitor Guy Messick said the suit was filed because of some questions about the way the pension funds were administered, but declined to comment further on Monday.

There are no secrets in Abington Township's employee pension fund, says township Manager Albert L. Herrmann. To prove it, Herrmann last week released information about the fund that was requested by employees in an anonymous letter to the Board of Commissioners. Figures released by Herrmann show that the fund has more than tripled in the last seven years, growing from $2,127,000 in 1980 to $7,612,668 as of July 31. As a result of that growth, employee contributions to the fund have been cut in recent years, from 5 percent of their annual salaries to 4 percent, Herrmann said.

The U.S. Department of Labor sued corporate officers of a defunct West Chester company for allegedly making improper loans and transfers from the company's pension plan. The lawsuit in U.S. District Court in Philadelphia alleged that, in 2006, Mark D. Dampman made loans to himself and another employee from the Reneuxit Inc. pension fund and transferred money from the fund to personal and business accounts. The amount of misappropriated money was not disclosed. The fund had $387,831 in assets in 2008, a Labor Department spokeswoman said.

In Newtown Township, the police pension fund is doing swimmingly, a $10 recycling tax on local businesses has been put on hold, and the township policy manual has been rewritten to prohibit supervisors from catching a ride in township cars. This information came out Wednesday during yet another marathon Newtown Township supervisors meeting. Early in the evening, the supervisors heard from Merrill Lynch representative Mike Leone, who informed them that in the time since the police pension fund accounts were "revamped" 19 months ago, the pension funds had increased by a yearly rate of at least 11.8 percent.

Although the West Chester Police Pension Fund has increased 19.7 percent over the last 32 months, borough officials think it could be doing better. That's why they have solicited proposals from various financial institutions to replace First National Bank of West Chester, which currently manages the $3.3 million fund. At last night's finance committee meeting, they were to have compared proposals to see which they believe would earn the most money. Vying to manage the fund are: Provident Capital Management Inc., Fidelity Bank, National Bank of Boyertown, CoreStates Investment Advisers, Merrill Lynch Asset Management Inc., First National Bank of West Chester and Delaware Trust Co. First National Bank has managed the fund since March 31, 1986, shortly before the current Borough Council took office, according to finance committee chairman Richard A. Fazio.

Once again, Philadelphia officials are leaning on the municipal employees' pension fund to keep city government from going broke. Just last month, Mayor Goode and other city officials were in Harrisburg telling members of the Senate that the state pension law required them to make a $133 million payment before the new fiscal year began July 1. That presented a problem. If the city obeyed the law, it might well default on bond payments and maybe miss a payroll or two. So city officials and state legislators quietly wrote a new law. Tucked away in the city's financial rescue plan, which Gov. Casey signed into law Wednesday, is a provision allowing the Goode administration to delay the June 30 pension payment to Oct. 1 - and possibly even later.