A Pittsburgh company told Bradford city officials on Tuesday that the municipality’s pension plans are minimally distressed.

During a city council work session, Cowden Associates Inc. reviewed the preliminary results of the city’s defined benefit pension plan valuations as of January 2017.

“Actuarial valuations involve estimates of and assumptions about the probability of events far into the future,” stated a report given out before the meeting. “The actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future.”

In layman’s terms, a minimally distressed pension plan is one that has liabilities that are funded between 70 percent and 89 percent. For Jan. 1, 2015, the city was at 70 percent, which is deemed minimally distressed, and Jan. 1, 2017, the city was at 71 percent, both under smoothed assets.

As far as market assets, Jan. 1, 2015, the city experienced a 74 percent rating and for Jan. 1, 2017, saw 65 percent, which is considered moderately distressed.

Pension payments to city retirees are forecast to increase in the coming years, officials say. For the city’s union workers, that could mean $1.83 million in payments for 2018, $1.85 million the following year, $2.04 million in 2020; and $2.08 million in 2021, according to the report.

The long-term assumption rate is 7.50 percent each year, Cowden representative Amy Crouse said, adding, “2015 … that was a struggle for everyone.” That year, she said, the city experienced a 2.75 percent decline, while 2016 saw a small increase with 3.50 percent, she said.

Crouse also looked at accrued liability, which is what the members of the pension plan earned to date. The combined liability in January 2017, which is $29.8 million, reveals $200,000 more than anticipated, the report stated. That’s a figure that is slightly more than what officials had projected based on assumptions, Crouse said.

Assumption about future inflation based on salaries was decreased, which reduced liability to $29.6 million, according to the report. She said the deficit totaled $8.7 million combined unfunded liability.

Crouse also reviewed the minimum municipal obligation payment.

For 2016, the city deposited $1.145 million. The expected amount for 2017 is $1.344 million. Next year, that amount is expected to be  $1.535 million and for 2019, $1.544 million, according to the report.

The sources of the increases include $107,000 for the temporary acceleration of contributions due to the 2015-16 experience losses; $20,000 due to the temporary reduction in contribution for assumption changes; and $35,000 due to turnover of active participants, the report states.

Also at the meeting, Crouse suggested the municipality reduce its assumptions to 7.25 percent from 7.50 percent. In turn, the city would take a “hit,” Crouse said.

“What that will do is immediately see an increase in MMO,” she said, adding that would result in more income.

The assumption for all of the unions would be $1.535 million under 7.50 percent and $1.645 million under 7.25 percent, the report states.

The municipal obligation payment would increase by around $100,000, Crouse said. But that uptick is not permanent, the report states.

With all this in mind, Crouse said Cowden officials wanted to give city officials something to think about.

In order to decrease expenses, the city could look at different service providers, she said.

One idea was to consider a defined contribution, which would only be offered to new employees.

But Councilman Brad Mangel has a tough time buying into that option, with the fact that only around two people are hired by city officials in a given year.

“The costs would be astronomical for two people,” he said.

Cowden official Frank Canonico said that the costs would be expensive in the short term but in the long term there would be a cost savings.