Philadelphia’s pension system is only 47 percent funded. But that won’t stop retirees from getting a collective bonus of $62.4 million in 2015.
That’s because the system pays out a bonus when it exceeds a set investment return target.
The target in 2014 was 8.85 percent. The fund returned over 11 percent.
So, retirees will receive a bonus for the first time since 2008.
Philadelphia’s isn’t the only pension system in the United States that pegs bonuses to investment return. But the practice is rare.
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Philadelphia’s is the only system in Pennsylvania that ties payment of the extra cash to investment returns, said James McAneny, executive director of the state’s Public Employee Retirement Commission, which monitors local plans.
About two-thirds of plans around the country provide stipends pegged to inflation or predetermined rates, rather than investment performance, according to a survey by the National Association of State Retirement Administrators.
As soon as April, beneficiaries in the system for a decade may see a bonus, said Francis Bielli, executive director of the board of pensions and retirement. Officials haven’t determined how many people are eligible and may spread payments over two checks, he said. The payouts amount to half the extra investment earnings.
The city last paid the bonus in 2008, distributing $40.5 million, Bielli said. He declined to comment on the effect of the stipends or the oversight board’s recommendations.
As noted above, the bonus checks could come as soon as April.
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