SEPTA package includes concessions for supervisors

SEPTA managers and other nonunion employees will be required to pay more toward their pensions, and managers hired in the future will be offered smaller pensions, under a plan expected to be approved Thursday by the SEPTA board.

About 1,800 supervisory, administrative, and management employees will be affected by the changes, designed to improve the "long-term financial stability" of the transit agency's pension plan, SEPTA officials said Wednesday.

The move is the latest by a public employer to reduce pension costs and shift more of the expense to employees and away from taxpayers.

SEPTA expects to save $183 million over 30 years because of the changes, said chief financial officer Richard Burnfield. SEPTA's pension plan for management employees is now funded at 64 percent of the level that would be required to pay all current and future retirement plan liabilities.

"We need to have a plan that is affordable to the authority and to those who provide funding to the authority," Burnfield said.

SEPTA now contributes about $37 million a year to the management employees' pension fund, while the employees contribute about $1.2 million, Burnfield said.

The changes will require employees, who now pay 1 percent of theirannual salary to their pension fund, to pay 2.5 percent starting in December and 3.5 percent starting in December 2016.

Also, the formula for determining the pension pay-out will be changed, to increase the value of a future pension for employees who remain with SEPTA for many years.

So a 15-year employee making $60,000 a year who now pays $600 a year and would collect a $16,200-a-year pension upon retirement would pay $2,100 a year and collect $16,800 a year upon retirement, under the new plan.

For management employees hired after Aug. 1, SEPTA will change the pension-plan requirements: A five-year vesting provision will be increased to 10 years, the normal retirement age will change from age 62 with 5 years of service to age 65 with 10 years of service, and retirement at age 55 with 30 years of service will be changed to retirement at age 60 with 30 years of service.

And new employees also will be required to pay more for the traditional pension plan: 6 percent of their salary. Or they can pay 3.5 percent for a less-lucrative pension, which would provide a payout of$14,400 a year for a worker earning $60,000 a year with 15 years' service.

Pensions were a major sticking issue in labor negotiations last year with the union that represents bus drivers, subway and trolley operators, and mechanics.

Leaders of Transport Workers Union Local 234 argued that managers' pensions were much more lucrative than those for union workers.

Willie Brown, president of TWU 234, said Wednesday that "pension reform" would be an issue in negotiations for a contract to replace the current pact that expires in October 2016.

Brown said the changes in the management pension plan are "a step in the right direction," but still place union employees at a disadvantage.

Source: Philly.com