Scranton’s required contribution to pension funds decreases by nearly $5.3 million
A separate court ruling that halted double pension payments to 22 clerical union retirees also played a role in the reduction, the plans' actuary,
The elimination of the cost-of-living increases reduced the plans' liabilities by
Those reductions, coupled with a
Part of the MMO will be covered by state aid. For this year, the city will receive about
Sekol said the reduced liabilities are a key element that helped reduce the unfunded liabilities of the police, fire and nonuniform plans, which dropped from
While the reduction in the MMO means less money will come out of the city's general fund, it is not a "cause for celebration," city Business Manager
The improvement comes at the expense of retired police officers and firefighters and certain nonuniform employees who saw their pensions slashed by 50 percent earlier this year.
The city stopped paying police and fire retirees cost-of-living increases as of 2014, because the pension funds are not financially sound. It also cut the pensions of nonuniform retirees who accepted a 2002 retirement incentive that doubled their pension after it learned increased benefits were not properly authorized.
The retirees challenged both decisions, but a
Bulzoni said the city continues to work toward the ultimate goal of improving the funds' health so they are no longer distressed. To that end, city officials agreed to lower the assumed investment return on the funds from 8 percent to 7.5 percent.
Sekol has long advocated for the city to lower the rate from 8 percent because it is not realistic. The city resisted the suggestion, however, because it would cause its MMO to increase.
The savings achieved through elimination of the retirees' raises and double pensions made it feasible this year, Bulzoni said.
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