Joseph N. DiStefano
The Philadelphia Inquirer
Robert McCann read about how a pair of suburban state senators are pushing pension increases for long-retired Pennsylvania public school teachers, state troopers, and others whose retirement checks are frozen at early-2020s levels. He rang me to talk about that.
“I joined the Philadelphia Police Department in 1966, when I was 27, and retired in 1988,” he told me. “I did arrests for everything from stealing a candy bar to murder. Except arson — I never had an arson arrest.”
McCann’s police pension is around $900 a month. He’s lucky to receive a similar amount in Social Security, from factory and store jobs he worked before and after his public service. Back when he was hired, the city didn’t enroll police in Social Security.
He’s been retired for longer than he worked for the people.
“My pension is the exact same as it was when I retired 34 years ago,” said McCann, who lives with his daughter. “The city did not allow us to pay into Social Security, but we have to pay for health care.”
If teachers and state troopers get a bump, he thinks maybe Philadelphia’s longest-retired officers might deserve one, too.
No cost-of-living increases
Kathy Quinn’s late husband, Thomas, retired in 2006 after 37 years on the force. For a time he was captain of West Detectives, she recalled, which investigated major crimes “from Drexel down to the airport. That was enormous pressure.
“As a younger officer, when he was in the sex crimes unit, he told me about how sad it was to see the things people did to one another. It was very upsetting. At a certain point, he stopped talking about it.
“As you go up the ranks, you have more and more pressure. Political pressure from the department. Pressure from city government. Pressure from wherever you are working. I think the stress contributed to the smoking and to the anxiety. He was treated for depression.”
The captain chose to receive lower benefits so his wife could get a half-pension when he died. He passed in 2016, 10 years after retirement.
“He used to talk about how unfair it seemed, that there was never any cost-of-living increase for police officers,” his widow recalls. “He was fortunate that as captain, he was able to accrue a lot of comp time. He was able to purchase additional health insurance. He got a reduced Social Security; he was in the Army Reserves, and he worked part time after he retired.”
Not counting medical insurance costs, his pension was nearly $6,000 a month; hers is a little less than half that sum.
Philadelphia’s pension benefits are negotiated through union contracts, with the Fraternal Order of Police and other city unions, said city spokesman Kevin Lessard.
There is no mechanism for raising retirees’ pensions. But there is a provision in the Pension Code allowing trustees to vote retirees a lump-sum bonus in years when fund investments meet special targets.
Last year capped a strong period for the city pension system. Under former Mayor Michael Nutter, who served from 2008 to 2016, the city boosted its pension contributions, and the board shifted away from private investments toward U.S. stocks, which rose in the long bull market.
The plan had met its targets, so trustees, representing the city and its unions, agreed to set aside $76.5 million, split between this year and next year, for extra payments to police and other city retirees. Some 23,272 retirees got the first installment in May and June.
But the stock and bond markets both have tumbled this year, so the bonuses aren’t likely to repeat after the final payment next spring, even though the need will be greater if inflation continues.
‘Living on peanuts’
With the recent jumps in the prices of food and fuel, “these people are living on peanuts,” said Robert Costello, owner of Feasterville-based Costello Asset Management, which invests around $200 million for clients including a few retired city officials.
His godfather, who retired from the fire department in the 1970s and took a less stressful job at paint maker Finnaren & Haley, “got about $900 a month” in pension, he recalls. “He didn’t get Social Security” for his time as a city firefighter. “And his pension was frozen” like all city workers’.
But Costello noted that long-serving and senior officers now have ways of improving their postretirement pay.
There’s the Deferred Retirement Option Plan (DROP), which supplements pensions with a 401(k)-like, tax-protected, city-funded savings plan. And city uniformed employees now pay into and receive Social Security.
Careful planning allows some top officers to retire at close to their working salaries, Costello noted. (There is also a cottage industry of annuity salesmen, police-oriented savings plans, and other fee-generating investments pitched at anxious officers and other city workers.)
Which does nothing for the older retirees of earlier years, who are left hoping the stock market recovers in a big way so the plan trustees might one day send them a little extra again.
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