Board of Pensions and Retirement

The Board of Pensions and Retirement administers the City of Philadelphia's retirement system and pays retirement benefits to eligible members, beneficiaries and survivors. It also manages the assets of the City's Pension Fund, with the goal of "safety of the principal and maximizing returns (net of investment fees) at the lowest level of risk."^[1] The Home Rule Charter requires that the fund always be able to cover current and future payments to eligible members who have paid in. The Board sits in the cluster led by the Director of Finance and is advised by an actuary; its trustees act as independent fiduciaries to the Fund and to employees.^[1] Under the City's description of the Board, it consists of the Director of Finance (who serves as chairperson), the Managing Director, the City Solicitor, the Personnel Director, the City Controller, and four members elected by Civil Service employees; the City's site lists nine trustees in all. The Board's own website lists its current trustees.

1 The funding record

The preliminary actuarial valuation for the fiscal year ending June 30, 2025 reported an actuarial funding ratio of 67.7 percent. Since the 2016 pension reforms, the ratio has risen from 44.8 percent in FY16, and the Fund's net pension liability has fallen by nearly $3 billion; the Board said the current funding level is the highest in more than two decades.^[1] The Fund has had break-even or positive net cash flow, not counting investment earnings, in seven of the last eight years, after only one such year in decades. Based on current assumptions, including City contributions under the Revenue Recognition Policy, the actuary projects 100 percent funding by calendar year 2032 (fiscal year 2033), compared with a projection of 2040 made in 2016.^[1] The City Controller has reported that the Fund's assets have grown from about $4.6 billion to more than $10 billion over that period.^[2]

2 Investments and fees

In March 2026 the Board voted to reduce the Fund's assumed rate of return for the fifteenth consecutive year, to 7.20 percent.^[1] The Fund uses a diversified asset mix, with core public-equity exposure generally through low-cost index funds and active managers retained only where they add value. The investment manager fee ratio at FY25 year-end was 0.24 percent, compared with an average of 0.64 percent during FY11 to FY15, which the Board estimates has saved over $140 million in nine years.^[1] Managers who miss objectives can face reduced assets, renegotiated fees or termination. The Board's Chief Investment Officer is Christopher DiFusco.

3 Members and services

The Board serves current and retired employees under several plans, including defined-benefit plans and defined-contribution components for newer hires (Plans 10 and 16). Nationwide is the third-party administrator of the 457 deferred compensation plan and the defined-contribution component of Plans 10 and 16; there were 29,789 participants in the 457 and 401(a) plans as of the first quarter of FY26, up from 24,495 in FY22.^[1] About 97 percent of recipients receive benefits by direct deposit, and the Board offers retirement appointments in person, by phone and by mail. It is developing a Request for Information to modernize pension payroll systems, in line with the technology plans of the Office of Innovation and Technology. Questions about individual benefits should go to the Board directly.

4 Link to the City budget and credit ratings

City contributions to the Fund are one of the largest fixed costs in the operating budget. Rating agencies have cited improvement in the pension system; Moody's found in November 2024 that, among the 20 largest cities, only four besides Philadelphia had an adjusted net pension liability lower than 100 percent, and S&P cited the City's long-term commitment to the Fund when it raised the City's bonds to A+.^[1] The Five Year Plan also includes a legacy pension obligation bond balloon payment that raises debt service by $64 million in FY29 (see City Treasurer).^[3] The Pennsylvania Intergovernmental Cooperation Authority reviews the Five Year Plan, including pension funding.

5 Labor context

Pension benefits are bargained or set by ordinance for most employee groups, so changes affect and are affected by unions such as AFSCME District Council 33, AFSCME District Council 47, the Fraternal Order of Police Lodge 5 and IAFF Local 22. The Board credited a collaboration among trustees, the Mayor, past administrations, City Council, unions, the State Legislature and others in the recovery. See Public Sector Bargaining in Pennsylvania and Office of Human Resources.

See also: Finance Department, City Treasurer, PICA, City Controller.

References

1. Board of Pensions and Retirement, "Fiscal Year 2027 Budget Testimony," March 25, 2026 (phlcouncil.com).
2. Office of the City Controller, press releases on the Pension Fund, February-March 2026 (controller.phila.gov).
3. City of Philadelphia, The Mayor's Operating Budget in Brief for Fiscal Year 2027, Introduction, and Appropriation Ordinance item 13.1 (phila.gov).