Allegheny County District Attorney Stephen Zappala filed a lawsuit against the county and its retirement board Wednesday, alleging that the pension fund is headed for insolvency and warning that unless the court steps in, county workers are at risk of losing retirement benefits they’re entitled to.
The pension system is “severely underfunded and presents a long-term risk for current and former County employees if not remedied,” the lawsuit said. “[T]he situation is so dire that significant affirmative action must be taken to avoid the presently inevitable insolvency of the System.”
The fund is projected to be insolvent as early as 2040, according to an actuarial report to the retirement board cited in the lawsuit. That means the average county employee “who continues to pay a substantial portion of their gross wages into the [pension] System over the next 14 years will face an insolvent System when they reach retirement, if nothing is done starting immediately,” Zappala said in a statement. As it currently functions, the statement contends, the system amounts to a “Ponzi scheme.”
County employees must pay 11% of their pay into the fund — “significantly higher than most systems in the United States,” the suit claims — which the county is required to match. But county contributions have been “significantly lower than most systems” for years, leaving the pension system only 42.7% funded as of January, down from 59.5% in 2013, according to the complaint.
Accounting best practices recommend pension systems be at least 80% funded to be considered “actuarially sound,” though the ultimate goal is 100% funded.
The county and its seven-member retirement board “have known that the funded status of the System has been dangerously low for at least a decade, and that the System’s funded status has decreased steadily and severely over that same period,” the lawsuit argues. “Despite these clear and well-known warning signs, the Board has continuously failed to develop a plan to counteract the diminishing funded status of the System, and the County has not proposed any measure to increase contributions to the System.”
A county spokesperson declined to comment on the suit, citing pending litigation. County Treasurer Erica Rocchi Brusselars, who serves on the retirement board along with county executive Sara Innamorato and County Controller Corey O’Connor, also declined to comment.
Brusselars and Innamorato only took office and assumed their board posts this year, whereas Zappala’s suit alleges problems that date back nearly a decade. The county treasurer throughout that period was John Weinstein: Rich Fitzgerald was county executive.
A statement from Zappala’s office said he began reviewing the pension situation after receiving a complaint from a county Retirement Board member.
O’Connor is also a short-timer in county government, having assumed the controller’s office in mid-2022. And he filed his own pension-related suit this past August, seeking to overturn a practice of including bonus payments in pension calculations. At the time, O’Connor’s office estimated the pension was only 31 percent funded, and due to be depleted in 2037.
Calculations of a pension’s health can vary depending on the measurements used: A January 2024 actuarial report offered three measurements of the pension fund’s health. The most optimistic of the three showed the fund with 64.3 percent of the assets it needed, when both present and expected future assets and obligations are calculated. (That number appears on the pension fund website.) But all three measurements show a growing shortfall over time.
Zappala filed the suit on behalf of the Commonwealth of Pennsylvania and his first assistant and chief of staff Rebecca Spangler, in her personal capacity as a future beneficiary. Spangler has contributed to the pension system since 1995.
Zappala is asking the courts to require the “County and the Retirement Board to take such action as is necessary to place the System into an actuarially sound condition,” declare that the system is not actuarially sound, “and/or restrain Defendants’ deceptive and unlawful conduct.”
