Pittsburgh City Council removes pension offset for city's nonunion employees

Nonunion Pittsburgh city employees who were facing a reduction in pension benefits are now eligible to receive full pension pay, as City Council removed the pension offset Tuesday.

The pension offset — which impacted city employees hired after June 30, 2004, with exceptions for firefighters, police and EMTs — called for a reduction in pension payments by 50% once a city employee reached maximum Social Security retirement age.

“So at the time folks need it the most, it gets reduced,” City Council Budget Director Bill Urbanic said during a recent public hearing on the matter.

Now, city employees who had been impacted by the offset have the option to receive full benefits after City Council members present at Tuesday’s meeting unanimously approved three related pieces of legislation that remove the pension offset for nonunion employees and fund the change. Councilman Corey O’Connor was not present.

The measure impacts about 400 city employees, according to Urbanic.

Under the new legislation, impacted city employees will increase the amount they pay into the pension plan from 4% of their wages to 6%. There is an option for them to keep their pay-in at the current rate of 4% and keep the 50% reduction in pension pay once they reach retirement age.

Councilman Bruce Kraus said he is working with other city officials to compile a list of all affected city employees to notify them of the change and their options.

To help fund the change, the city is extending the length of time it commits to using parking tax revenue to fund the pension fund by another 10 years. Adding 10 years brings in another $45 million, Urbanic said.

Removing the pension offset requires $2 million more for the annual municipal contribution, Urbanic said. That number would jump to $5 million if union workers were included.

For union employees to change their pension protocols, they would need to go through a collective bargaining process, according to Urbanic. Council President Theresa Kail-Smith said they were hiring a legal consultant to determine what could be done for union workers under the pension offset.

“Hopefully they’ll be included down the road, too,” she said.

Pension offsets have been instated and removed several times — something Kraus referred to as a “yo-yo” effect that toyed with city workers’ retirement finances — beginning under former Pittsburgh Mayor Tom Murphy.

Council members have said that the pension offset was introduced during a time of financial hardship for the city, but it should be removed now that the city is in a better financial position.