(The Center Square)—Allegheny County officials say they may ask taxpayers to help fill a $1.4 billion hole in its pension plan, but the plan’s own investment strategy has helped deepen its “looming insolvency,” according to an investigation by The Center Square.
Officials emphasize that the southwestern Pennsylvania county of 1.2 million and its Airport Authority, which manages Pittsburgh International Airport, have not contributed enough to the pension plan. In a report released last month, they devoted nine pages to what they said was the chief cause of the crisis: from 2009 to 2024, inadequate employer contributions were responsible for $295.9 million of the $1.4 billion deficit.
Yet, tucked further back in the report is a three-page acknowledgment that “investment management practices and legacy investment decisions” were also responsible. The report attributes $273.9 million of the $1.4 billion hole to “experience,” an actuarial catch-all term that includes investment performance. ‘Stuck’ in Allegheny County
“The fund is still impacted by prior investment decisions that continue to hurt liquidity, increase costs, and dampen performance,” the report notes.
Brian P. Gabriel, solicitor for the Allegheny County Retirement Board, acknowledged that around 2015, county retirement officials invested substantially in private equity funds, which are investments in private businesses that last for years or even a decade. “Almost 30% of the fund was allocated to alternative investments including private equity, private real estate, and life settlements, strategies which were designed to provide higher returns or reduce volatility, but which resulted in reduced performance, lower liquidity, and higher fees,” Gabriel told The Center Square.Unwinding the investments, he said, will be difficult.”We’re basically stuck,” Gabriel said. “They’re illiquid. You don’t have the ability to pull out. Practically speaking and legally speaking, there’s not much you can do.”
The report notes that the county’s retirement board hired a “disproportionate number of managers for a fund of its size,” causing the county to pay them more in annual fees. The plan has 84 managers, 59 of which manage illiquid funds such as private equity. It had 91 managers last year.The county paid roughly $4.2 million a year in investment management fees, according to The Center Square’s review of investment records.’A big red flashing sign’
The report found that Allegheny County’s pension plan underperformed both the median public defined-benefit pension and a simple portfolio of 60% stocks and 40% bonds. From 2005 through 2025, a $1 investment grew to $3.37. By contrast, the $1 would have increased to $3.83 in a typical public plan and $4.74 in one with a portfolio of 60% stocks and 40% bonds. The S & P 500, an index of 500 large public companies, rose 57.81% from April 1, 2021, to March 31, 2026. That means $1 invested at the beginning would be worth $1.58 at the end, excluding dividends.
Leonard Gilroy,senior managing director of the pension integrity project for the Reason Foundation, a free-market think tank, said Allegheny County’s pension plan for roughly 12,400 active and inactive participants is due to run out of money by 2043.”That,” he told The Center Square, “is a big red flashing sign.”
As of December 2025, less than 17% of Allegheny County’s pension assets were invested in so-called passive investments such as mutual funds and index funds. That compares to 51% for Philadelphia’s pension system, 48% for the state’s Public School Employees’ Retirement System and 68% for the Pennsylvania State Employees’ Retirement System.
Separately, The Center Square conducted a records request of the county’s investments in the first quarter of the year. According to the county’s own documents, two private-equity investments have fared particularly poorly.
The county invested $13.5 million in Draper Triangle Ventures III, which invested in early-stage, private tech firms. Distributions and remaining value totaled $8.4 million as of March 31. That’s $5.1 million less than the county contributed.
Even worse has been the county’s investment in PLSG Accelerator. The county contributed $252,871. Its distributions and remaining value amounted to $26,464. That’s roughly $226,000 less than the county contributed. Private-equity shortfalls
Five additional private-equity investments were worth a combined $1.4 million less than what the county invested in them.
Overall, the county’s investment in its private equity portfolio has been profitable. The county’s internal rate of return is 8.6%.Despite the gain, the report recommends moving away from private equity. The pension once had a bigger bet on it. Its policy target increased from 5% in 2007 to 22.5% in 2016. Today, private equity accounts for 11.4% of the fund’s assets.
Other investments also declined in value in the first quarter.
Baillie Gifford, a British investment management firm, recorded a $1.38 million investment loss, while the county withdrew $5 million. Segall, Bryant, & Hamill lost $1.2 million, with no reported cash flow. Federated High Yield lost $416,000, while Oaktree High Yield lost $269,000. Together, the four investments recorded a $3.26 million investment loss in three months.
Some investments have performed poorly over the long term.Oaktree Real Estate has posted double-digit negative returns over one-, three-, five- and seven-year periods. Baillie Gifford has posted a negative annualized return over five years. The report says the county and Airport Authority need to contribute $140 million to $150 million a year for the next 20 years to address the pension’s unfunded liability—roughly $90 million to $100 million more than they contribute. It identifies property, sales, earned income, and payroll taxes as potential sources of that money, as well as new taxes associated with legalizing marijuana.
