COLUMBIA — A new pension plan that should save the city nearly $50 million and solve the profound problem of underfunded pensions won high praise from city officials at a news conference on Thursday.
The Mayor’s Pension Review Task Force plans to have 80 percent of the pension plans funded by 2032. City Manager Mike Matthes said the new pension plan would affect only new city employees, police officers and firemen that are hired after Oct. 1. Current employees and workers who have already retired will see no changes.
Here's the breakdown of projected savings over the next 20 years from a new pension plan city officials plan to implement with the new budget year beginning on Oct. 1.
Fire Department: $26 million
Police Department: $17.6 million
General city and utility employees: $6 million
The police and fire departments have no plans to hire new workers until after Oct. 1. Matthes also said during a news conference Thursday that there will be no cuts from either department.
Under the new pension plan, the existing "80 and out" rule would be eliminated for police department employees and for general and utility workers. This rule states that employees are eligible for full retirement early if their years of service combined with their age is equal to 80.
Third Ward Councilman Gary Kespohl said the rule would allow someone hired by the city at the age of 21 to get full retirement benefits by 51. Taking this rule out adds more money to the pension fund because employees will have to work until age 60 to get full retirement.
Mayor Bob McDavid said at the news conference that he is proud of the task force members for developing a plan that requires no tax increases or layoffs.
McDavid established the Pension Review Task Force in September 2010. The task force then submitted a report in September 2011, which recommended possible solutions to the $117.8 million gap in unfunded pension liabilities.
The task force has different pension plans for police officers, firefighters and general and utility employees. The police and firefighter plans are controlled by city ordinance and administrated by the city. The general and utility employee plans are controlled by the state statute and administered by the Local Government Employees Retirement System, commonly known as LAGERS.
The task force addressed each of the employee groups' plans individually in an attempt to save as much money as possible. Matthes said city workers were the ones bringing ideas and potential solutions to the table for discussion.
McDavid said the task force was correct in its approach to the problem.
"Pension plan funding is not a political problem," McDavid said. "It is a math problem."
Representatives from each of the four groups presented the projected savings over a period of 20 years. Combined, the savings adds up to $49.6 million. This is money that the city saves from putting into the pension fund, Kespohl said.
The new pension plan will be proposed at the City Council meeting on Monday.
Supervising editor is Scott Swafford.