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Peduto announces revamped retirement incentive program

Bob Bauder
| Wednesday, Dec. 11, 2013, 9:18 a.m.
Pittsburgh mayor elect Bill Peduto pauses to take a photo with his iPhone during the Veteran's Day parade, Downtown.
Jasmine Goldband | Tribune-Review
Pittsburgh mayor elect Bill Peduto pauses to take a photo with his iPhone during the Veteran's Day parade, Downtown.

Mayor-elect Bill Peduto on Wednesday scrapped his controversial early retirement proposed for non-union employees, and questions surfaced immediately regarding how many people would accept his new proposal for a scaled-down offer of a lump-sum buyout.

Under Peduto's new plan, employees with combined age and employment time equal to at least 70 years would receive payouts based on years of service if they retire early. They would be eligible only for partial retirement benefits as opposed to the full retirement benefits Peduto originally wanted to offer 136 employees. The payout would be capped at one year's salary.

A Municipal Pension Board official called the plan a bad deal.

“There's no way in the world I would take it now, and my phone's been ringing off the hook all day,” said John Sibbett, board president, who planned to retire early under the original proposal. “People aren't going to go.”

Kevin Acklin, who will serve as Peduto's chief of staff, said he hasn't worked out total costs to the city or how many employees would be eligible. He said the plan would save the city cash by eliminating jobs and decreasing pension legacy costs.

Acklin said the new administration wants to offer the buyout “because it's the right thing to do.”

“We made it clear that we're going to change the way business is done here in the city,” he said. “We want to give people the ability to move on if they don't want to sign up for that change in the way city government operates.” Peduto will take office on Jan. 6.

Sibbett said the incentives for senior employees would be minimal at best.

Municipal employees must be at least 60 with 20 years of service to retire with a full pension, he said. Employees who retire early lose one-half of 1 percent of their pension payout for each month they are younger than 60, he said. A 50-year-old employee can expect to lose 60 percent, Sibbett said.

The stakes are high for employees deciding whether to take early retirement. Current or retired employees who die pass half their pension benefits to the surviving spouse. An employee Peduto fires would pass only what he or she put into the pension plan — without interest.

“That's why everybody is in an uproar, because they want to be able to protect their spouse,” Sibbett said. “The people who are truly going to take this are the people who are being fired.”

Peduto scuttled the original early retirement plan in response to opposition from Mayor Luke Ravenstahl, who threatened to veto it, the city's state-appointed fiscal overseers and City Council members.

One of Pittsburgh's fiscal overseers said he hasn't reviewed the plan in detail but called it an improvement.

“We're much happier now that this is not related to pension,” said James Roberts, an Act 47 coordinator. “We're looking forward to working with the city to see if we can make it work.”

Nick Varischetti, who heads the Intergovernmental Cooperation Authority, another overseer, said his agency will evaluate the plan and support it if it makes fiscal sense.

Failure of the original proposal marked Peduto's first setback in his transition to office. He won November's election by a wide margin with only token opposition.

Gerald Shuster, professor of political communication at the University of Pittsburgh, said Peduto's mistake was not gathering the support of council and financial overseers beforehand.

“He failed to promote it quietly and gather the support that he needed, but he's not the mayor yet, so it is something that's easily erased if he plays his cards right in the future,” Shuster said.

Staff writer Margaret Harding contributed to this story. Bob Bauder is a staff writer for Trib Total Media. He can be reached at 412-765-2312 or bbauder@tribweb.com.

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