City In Transition
2:00 pm
Wed January 15, 2014

Peduto's Early Retirement Plan for City Employees No Longer Tied to Pensions

Mayor Bill Peduto’s early retirement plan for city employees was once again brought before City Council on Wednesday, but with one major change.

“This program has nothing to do with pensions,” Peduto’s Chief of Staff, Kevin Acklin, told the legislative body. “It’s a separate benefit that we would propose to make available to these employees if they so elect, or if their service is terminated.”

The change comes after rumblings that tying early retirement to pensions might not be allowed under Act 47 oversight or by the Pennsylvania Municipal Retirement System. 

Instead, the new plan is a straightforward severance package. Acklin said eligible employees “would be entitled to 2.5 weeks of salary per year of accredited service, payable over 24 months, on a monthly basis.”

The rules regarding who would be eligible for early retirement haven’t changed: a worker’s years of service plus his or her age must equal 70 years.

Acklin provided to council a fairly comprehensive breakdown of the projected costs and savings of the program.

If all 176 eligible employees took the option, the total buyout cost would be $8.8 million over two years. That’s compared to the annual salary cost of the positions, which is $9.5 million.

Acklin said he’s not expecting that all 176 employees will take early retirement, and that the number will probably be closer to half of that. If around 90 employees took the option, the cost for the program would be reduced to $4.4 million. Furthermore, Acklin said, if the city eliminates or combines one-third of those vacant positions—roughly 30 positions—the total cost of the program would be $2.8 million over two years. With those numbers, he said, the city could potentially save $3.6 million over five years.

“We see a lot of duplication in our city workforce, we see a lot of opportunity to bring technology, we see a lot of opportunity to manage our workforce better,” said Acklin. “That’s what we’ve been working on."

Councilwoman Darlene Harris expressed concern at the meeting that the city would lose considerable institutional knowledge as a result of the early retirement program.

Acklin said losing that knowledge is “not always a bad thing,” and Harris responded by saying “it’s not always a good thing either.”

Councilman Rev. Ricky Burgess said he’d like to see a greater guarantee that this plan will actually save the city money.

“I think we perhaps can talk about having a mandatory hiring reduction attached to this, so we know over the next two years we will protect the city from the financial consequences of this so we can keep it at the $2.8 million framework,” said Burgess.

Council voted to hold the legislation for one week. A public hearing on the issue is schedule for Tuesday, January 21st at 1pm in council chambers.