Council approves pension changes

The changes, which affect only new hires, set the minimum retirement age needed to receive maximum pension benefits at 55 with 30 years of experience, changed the multiplier from 2.8 to 2.5 and eliminated the cost-of-living allowance.

The changes come as a result of a large shortfall in the plan’s funding – the plan is currently funded at 52 percent, while healthy levels are around 70 percent.

During discussion before the vote, Councilman Conrad Griggs pointed out that the average current employee, who will see no cut in benefits, will receive nearly 90 percent of his or her average salary with 30 years of time served.

“This is their plan – it’s not a pipe dream, this is what they have,” he said. “I don’t know of anybody in corporate America that has a pension like this, at this or any other level.”

Councilman Gary Deaver said that it would cost about $45 million to bring the plan to 70 percent funding, while the city’s fiscal year 2006-2007 budget – which had its first hearing at last night’s meeting – only has $90 million available in the general revenue fund.

“It’s a big problem that requires a big solution, and this bill that we’re looking at tonight only puts some pressure on the wound,” Deaver said. “We need to have some home runs hit by our investment groups to take us forward.”

Other council members compared the situation to what has happened to other large companies and their company-funded pension plans since Sept. 11, 2001.

“I’ve got a friend who worked at United Airlines for seven years,” Councilwoman Mary Collette said. “He’s already taken a 48 percent pay cut. His pension was supposed to be $900 a month – now … it’s $14.30 a month. We’re doing the best that we can to make sure that we protect the benefits that (the Police and Fire employees) have while protecting the other 1,000 employees that we have.”

Assistant City Manager Evelyn Honea said the proposed budget for next year also includes a $562,000 increase in city funding for the pension plan.

See SBJ’s May 22 issue for more from the May 15 council meeting, as well as more on the state of pension plans locally.