Pension contribution changes part of Philadelphia's deal with unionPosted On: Aug. 25, 2014 12:00 AM CST
Philadelphia reached a tentative seven-year contract agreement with the representatives from the city's largest municipal workers' union, AFSCME District Council 33, that will increase employee contributions to the pension fund and allow new employees the choice between a hybrid plan and the traditional pension plan, said Mark McDonald, a spokesman for Mayor Michael A. Nutter.
The contract agreement term is retroactive from July 1, 2009, through June 30, 2016. Terms of the contract must be ratified by members of DC 33.
Current participants in the $4.8 billion Philadelphia Municipal Retirement System, a defined benefit plan, will have their employee contribution increase by 1% of pay over the next two years — 0.5% effective Jan. 1, 2015, and an additional 0.5% effective Jan. 1, 2016.
All employees hired after the contract is ratified can either enter the defined benefit plan and pay 1% more than current participants or enter a hybrid plan. Current employees have 90 days following ratification to make an irrevocable election to move to the hybrid plan.
James Comtois writes for Pensions & Investments, a sister publication of Business Insurance.