The Work Towards Pension Reform Continues in City Hall
2011-02-11 · By Editor
On Tuesday, February 15, 2011 the City Council will consider labor agreements with four employee associations that achieve another significant step toward pension reform. Agreements with the City’s Management Association, Confidential Employees, Attorneys Association and Prosecutors Association will result in new employees paying the full employee share of their pension costs, a lower benefit formula, and an increased retirement age.
“These four groups should be applauded for their willingness to come to the table and recognize that pension reform is in everyone’s best interest,” said Mayor Bob Foster. “Ultimately, the work needs to go beyond these agreements, but these groups should be commended for agreeing to take these significant steps toward pension reform.”
The agreements will consist of the following changes:
- New employees will pay the full 8% of their salaries for their pension costs, increasing from the current level of 2%.
- New employees will retire with a benefit formula of 2% for each year worked, as opposed to the current formula of 2.5%.
- New employees will be eligible for full retirement at age 60 rather than the current age of 55.
- Employees final compensation will be based on a three-year average of their salary, not the year in which they earned the most.
The new pension formula cannot go into effect until all bargaining units in the same category (Miscellaneous) agree to similar changes. Last week, the City Council declared impasse with the Engineers to achieve these changes. However, the City has not reached agreement on these pension reforms with the City’s largest association in the Miscellaneous pension category, the International Association of Machinists.
“The need for pension reform is real, and without change, our pension system is unsustainable,” said City Manager Pat West. “I can’t say enough about these four groups for their willingness to negotiate these changes. We will continue to reach out to our remaining bargaining units with the goal of implementing pension changes for all units.”
Earlier pension reforms include changing the formula for employees hired after October 1, 2006, to 2.5 percent of their salary, as opposed to 2.7 percent.