Allegheny County District Attorney files lawsuit over ‘imminent crisis’: County pension unfunded
Allegheny County District Attorney Stephen Zappala filed the lawsuit over what he said is a looming crisis: the county’s lack of pension funds.
The lawsuit was filed in Allegheny County Common Pleas Court against the Allegheny County Commission.
Zappala said proceedings in the lawsuit began several months ago when a trustee of the Allegheny County Retirement Board filed a complaint with his office. The complaint alleges conspiracy to defraud the Allegheny County Employees’ Retirement System.
The investigation into the complaint is ongoing, but Zappala said part of looking into the issue involves reviewing the retirement system’s finances. The review found that the retirement board determined that the retirement system’s liabilities exceeded its assets by about $1.27 billion. This means that the plan is only 42% funded and is not actuarially sound.
Additionally, Zappala’s office found that the retirement board’s actuary and Allegheny County’s independent public accountant had been warning since at least 2016 that the retirement fund would be depleted in about 15 years. Those warnings led the retirement board to increase the mandatory pension contribution rate for county employees from 9 percent in 2016 to 11 percent in 2024, making it one of the highest in the nation.
Zappala also claimed that the retirement committee invested aggressively to achieve its assumed investment return of 7.75%, which he said “resulted in unsustainable volatility and significant losses.”
The board’s actuary currently estimates that the average county employee is 46.4 years old, has worked for 11.3 years, and will face a “bankruptcy system” upon retirement if immediate action is not taken. Zappala said that’s why he took action – because “the system doesn’t work like a Ponzi scheme.”
Sapala said the lawsuit, which makes several demands to the court, will not affect current retiree payments:
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Statement that the system is not actuarially sound
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Order the defendants to develop a plan to bring the system to actuarially sound status of 100% funded status within a reasonable period of time
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Orders Allegheny County to allocate sufficient funds within a reasonable period of time to maintain the actuarially sound status of the system at 100% funded status, as required by secondary county regulations
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Judgment against Allegheny County and Commission
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Prohibits the Commission and Allegheny County from deceptively and illegally administering the system.
“Allegheny County is facing one of the worst pension crises in Pennsylvania’s history. I hope all parties will work together to ensure that benefits to system participants are paid out as promised.
There is no immediate risk of non-payment of pensions.
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