Protecting Progress: Why Sustained Discipline is Critical for Pension Stability

On September 19, 2025, Cherelle L. Parker, Mayor of the City of Philadelphia, led a convening on Protecting Progress: Why Sustained Discipline is Critical for Pension Stability at the Wharton School in collaboration with the Penn Institute for Urban Research (Penn IUR) and the Office of Government and Community Affairs. The event brought together a diverse coalition of stakeholders—elected officials, public servants, financial experts, labor leaders, and academics—to reflect on Philadelphia’s journey toward pension reform and fiscal resilience. Susan Wachter, Co-Director of Penn IUR, opened the program by introducing the keynote speaker. Mayor Cherelle Parker, Philadelphia’s 100th mayor and the first woman to hold the office, delivered an address that framed pension reform as both a fiscal necessity and a moral obligation.

“This matters a great deal to us,” Mayor Parker declared. “I want you to know that as mayor of this city, I’m going to do everything that I can to protect the work that you all have done over the years, along with the shared sacrifice of everyone.”

Her remarks set the tone for a day of reflection, analysis, and recommitment to achieving 100% funding of the City’s pension system by 2033. Following Mayor Parker’s remarks, Finance Director Rob Dubow introduced the first panel, which included Fran Bielli, Executive Director, City of Philadelphia Board of Pensions and Retirement; Suzanne Staherski, Senior Fiscal Policy Analyst in the City’s Budget Office; Brian Coughlin, Board Member, City of Philadelphia Board of Pensions and Retirement; and Jacqueline Dunn, City Treasurer, City of Philadelphia. After the first panel completed its presentation, Joe McLaughlin, Director, Institute for Public Affairs, Temple University, presented, and David Draine, Principal Officer, Public Sector Retirement Systems, The Pew Charitable Trusts, gave the third presentation. Following the presentations, a discussion was moderated by Wachter.

Mayor Parker began by recounting the fiscal crisis that gripped Philadelphia during the Great Recession. At the time, the City’s Pension Fund was dangerously underfunded—hovering around 44.8%—and consuming up to 17% of the General Fund budget. The City was forced to seek permission from Harrisburg to delay its Minimum Municipal Obligation (MMO) payment, a move that underscored the severity of the financial strain.

“We just didn’t have the financial wherewithal,” Parker recalled. “We needed an immediate answer to help us with the crisis, but we also needed a long-term solution.”

That solution came in the form of a dedicated Sales Tax, negotiated through bipartisan collaboration in Harrisburg. The legislation, championed by then-Council President Darrell Clarke and supported by Parker, then Chair of the Philadelphia Delegation in the Pennsylvania House, earmarked revenue to stabilize the Pension Fund. Despite some opposition, Parker and Clarke insisted that pension stability was foundational to the City’s fiscal health.

A recurring theme throughout the event was the ideal of shared sacrifice. Mayor Parker emphasized that the pension turnaround was not the result of any single actor, but rather a collective effort involving City workers, union leaders, elected officials, and the Pension Board and its staff. “It was no ‘I,’” she said. “It was our local legislative leaders, the executive branch, state legislators, and our workers. When we think about the adjustment to plan design, it was all shared sacrifice.”

Fran Bielli, Executive Director of the Board of Pensions and Retirement, echoed this sentiment. He credited Parker’s leadership and bipartisan negotiation skills for securing the Sales Tax revenue that will have contributed over $1.1 billion to the Pension Fund by FY30. “The mayor was being a little humble,” Bielli said. “She worked across the aisle in Harrisburg to make the Sales Tax a reality.”

The collaboration extended to labor unions, who agreed to increased employee contributions and plan design changes. These reforms were not easy, but they were essential to the long-term health of the pension system.

Captain Brian Coughlin of the Philadelphia Fire Department provided a vivid analogy to explain how the pension system functions. “Think of the pension fund as a tank,” he said. “The drain at the bottom is the benefits—about $800 million a year. If the tank runs dry, the promise is no longer being kept.”

Continuing the metaphor, Coughlin outlined the key components that “keep the tank full”: employee contributions, employer contributions, investment earnings, and expense management. He emphasized that while employee contributions are fixed and stable, investment earnings and employer contributions fluctuate and must be carefully managed.

“When you reach 100% funding, the City no longer has to pay off the unfunded liability and only pays what is known as the normal costs, which results in lower employer contributions,” he explained. “That saves the General Fund about $500 million a year—real money that can go toward City services.”

Philadelphia’s Pension Board has taken a disciplined approach to investment management. Under the leadership of Chief Investment Officer Christopher DiFusco and consultants from Marquette Associates, the Board has significantly reduced fees and improved returns.

“We’ve cut our expense ratio from 0.64% to 0.28%,” Bielli noted. “That’s over $120 million in savings. We’re not looking for our next jobs on Wall Street—we’re here to serve the taxpayers.”

The Board has shifted its focus toward index funds and more stable asset classes, including investment-grade fixed income, to reduce risk and improve predictability. Dave Smith of Marquette emphasized the importance of portfolio discipline: “Markets will evolve, but our destination—100% funding—remains the same.”

Senior Fiscal Policy Analyst Suzie Staherski presented projections showing that the City’s annual contributions to the Pension Fund—currently around $600 million from the General Fund and $740 million across all funds—will drop dramatically once full funding is achieved in FY2033. This reduction will free up hundreds of millions of dollars for other priorities.

However, Staherski warned of three key risks that could derail progress:

1. Reverting to minimum contributions

2. Enhancing benefits prematurely

3. Returning to riskier investment strategies

Mayor Parker was unequivocal in her stance: “I get very protective when I hear people who didn’t have a nickel in the quarter talk about spending before we’re 100% funded. That is a line for me as mayor.”

City Treasurer Jackie Dunn highlighted the broader implications of pension reform, including improved credit ratings. “We now have the highest combination of credit ratings the City has seen in more than four decades,” she said. “But the rating agencies caution that we must stick with these reforms to maintain momentum.”

Philadelphia’s progress has not gone unnoticed. The Government Finance Officers Association awarded the City for innovation in finance, and the Pew Charitable Trusts conducted a stress test showing that Philadelphia’s pension system outperformed peer cities.

David Draine of Pew placed Philadelphia’s achievements in national context. Comparing Philadelphia to cities like Baltimore, Pittsburgh, Atlanta, and Chicago, he noted that only Philadelphia and Baltimore are making substantial progress toward full funding.

“Philadelphia is paying down meaningful amounts of pension debt each year,” Draine said. “That’s a success story. But the question is, can policymakers maintain the fiscal discipline to continue that success?”

Dr. Joe McLaughlin of Temple University provided a rich historical narrative, tracing pension challenges back to the 1980s. As a former deputy mayor and longtime political scientist, McLaughlin described the political and fiscal pressures that shaped pension policy over decades.

He recounted the formation of working groups in 2012 that brought together labor, business, and government leaders to discuss pension reform. “Nothing was off the table, and everything was off the record,” he said. “We were talking about very sensitive issues—changing labor pension plan design, introducing a new tax.”

McLaughlin praised Mayor Parker and former Council President Darrell Clarke for resisting pressure to divert pension funds to other uses. “They stood out,” he said. “And that’s why we had this issue resolved.”

In the moderated discussion led by Wachter and throughout the event, speakers acknowledged the critical role of labor unions and City workers in the pension reform process. Negotiating higher employee contributions and accepting plan design changes were not easy decisions, but they were necessary to ensure long-term stability.

“It’s not easy for labor to go to their members and say, ‘You have to pay more,’” Bielli said. “But they did it, and it was all done in a spirit of collaboration.”

Captain Coughlin reinforced the human impact of pension stability. “This is about retirement security for our members,” he said. “It’s about keeping the promise we made to the people who serve this city."

Mayor Parker closed the event with a powerful reaffirmation of her commitment to fiscal discipline and pension stability. “I’m going to do everything that I can to protect the work that you all have done,” she said. In discussing proposals to enhance pension benefits before the fund reaches 100% funded, the Mayor said, “This is not leadership. It’s political expediency, and we’ve got to be willing to call it out.”

She warned that political pressures to increase spending prematurely are already mounting. “People have started laying the groundwork to spend before we’re 100% funded,” she said. “I want you to know—I’m prepared for that to be a public fight.”

“Leaders in Philadelphia demonstrated their commitment to protecting progress for pension stability in today’s program,” Wachter concluded.

The Protecting Progress convening was more than a celebration of past achievements—it was a recommitment to the principles of fiscal discipline, transparency, and shared responsibility. Philadelphia’s pension reform journey offers a model for other cities grappling with similar challenges. But as every speaker emphasized, the work is not done. Staying the course is essential to securing a stable and prosperous future for the city and its public servants.