Pittsburgh City Council considers removing pension offset for nonunion workers

Certain Pittsburgh city employees who are facing a reduction in pension benefits in their retirement may receive full pension benefits after all, if a proposal before City Council is passed.

Currently, a pension offset calls for a reduction in pension payments by 50% once an employee reaches maximum Social Security retirement age. The pension offset applies only to city employees hired after June 30, 2004, and excludes firefighters, police and EMTs.

“The offset requires that when these retirees receive their Social Security, their city pension is then reduced by up to 50%,” City Council Budget Director Bill Urbanic said. “So at the time folks need it the most, it gets reduced.”

Such pension offsets have been instated and removed several times, beginning under former Pittsburgh Mayor Tom Murphy, creating a “yo-yo” effect with people’s retirement finances, Councilman Bruce Kraus said.

The offset was instituted during a time when the city was contending with severe financial hardships, Councilwoman Deb Gross said. Now that Pittsburgh is in a better financial position, she said, it’s time to reinstate full pensions for all city workers.

“The way I understood this is that when the city was at its most desperate time, there were these positions that weren’t under union representation that really bore the brunt of cost-cutting measures,” she said. “This is not that time. The city has financially recovered. And it is time to reinvest in those people.”

The current proposal in front of council — which is outlined in three separate, but related pieces of legislation — would only apply to nonunion members, Urbanic said. Any union employees affected by the offset would have to go through a collective bargaining process to change their pension protocols, he said.

Council President Theresa Kail-Smith said they are hiring a legal consultant to determine what can and cannot be done for union workers who have the pension offset.

Removing the pension offset for nonunion workers would impact around 400 city employees, according to Urbanic.

During a virtual public hearing hosted Thursday night, Mark DePasquale, who has worked for the city for 15 years in the Department of Public Works and serves on the city’s pension board and comprehensive investment board, spoke in favor of removing the pension offset.

He said he gets calls from employees who are upset by a system they feel is “unfair and egregious,” particularly because it impacts only a certain group of city employees.

“It almost ensures that employees that have dedicated their entire life to public service with the city of Pittsburgh will not have a high quality of life in their retirement,” he said, urging council members to “let this horrific, horrendous policy go away.”

The measure calls for impacted city employees to increase their pay-in from 4% to 6%, Urbanic said. There would be an option for employees to keep their pay-in at 4% and keep the 50% drop in pension pay upon reaching retirement age.

To help fund the measure, the city would extend the length of time it commits to using parking tax revenue to help fund the pension fund by another 10 years.

Adding another 10 years would bring in another $45 million, Urbanic said.

The move would require $2 million more for the annual municipal contribution, Urbanic said. That number would jump to $5 million if union workers were included.

Councilman Anthony Coghill collected about 200 signatures in favor of ending the pension offset, and several council members voiced strong support for the measure during the public hearing.

• “This is absolutely the right thing for this council body to be doing,” Councilman R. Daniel Lavelle, chair of the finance and law committee, said. “Our hard-working employees absolutely deserve this.”

The measure is expected to appear on a council agenda in the coming week.