Thursday, January 06, 2000
City retirement board considers sweetened pension plan
BY ROBERT ANGLEN
The Cincinnati Enquirer
Cincinnati city workers could retire with 25 years of service at age 48 and collect 62.5 percent of their salaries as pensions under a plan being considered by the city's retirement board.
But city administrators say it is the taxpayer who will be paying for those early outs at a cost of $5 million to $20 million a year.
This plan would cost the city a significant amount of money to improve one of the best retirement plans in the country, said Finance Director Timothy Riordan.
The plan, being considered today by the city's retirement board, would lower the age and number of years an employee would need to work before becoming eligible for pension and health benefits.
But Councilman Todd Portune, who sits on the board, says the early retirements would ultimately save the city millions in salaries by getting people off the city payroll who do not need to be replaced.
We are going to have to do it, he said, adding that the city needs to consolidate positions and eliminate nonessential jobs. This is a compassionate way to get it done.
He said the amount saved would far outstrip what the city is required to pay out.
Just think about it, he said, offering an example of 1,000 employees retiring who are making an average of $50,000 a year. That would be $50 million a year.
City Manager John Shirey said he has thought about it and it doesn't make sense. He said the savings aren't clear-cut because retired employees collect a percentage of their salary.
When you look at life expectancy these days, if a person retires at 48 years old, you could end up paying them for more years of retirement than they actually worked for the city, he said.
The retirement changes, which were approved by a subcommittee of the retirement board Monday, would allow 25-year employees to retire at age 48 and collect about 62.5 percent of their salary.
The way it is now, employees can retire after 30 years and collect 75 percent of their salary.
Under both plans, employees would continue to get full medical benefits for themselves and their families and a 3 percent cost-of-living adjustment compounded annually.
This applies only to regular city employees and not police officers and firefighters, who have a separate retirement plan.
The public does not expect us to give government employees such a rich and generous retirement plan, Mr. Shirey said. If Mr. Portune wants to reduce the work force, the way to do it is by reducing the budget.
Mr. Portune said today's vote scheduled for 1:30 p.m. in a third-floor conference room at City Hall is the second time since 1998 that the retirement board has considered easing retirement requirements. The first ended in a deadlocked 5-5 vote with one member absent.
The 11-member board, which oversees an estimated $2.6 billion in assets for about 6,200 active employees and 4,200 retirees, makes recommendations to the City Council, which would be required to vote on any changes.
Private actuaries hired by the city to examine the retirement system have estimated the city would have to put as much as $20 million more every year into the retirement sys tem. He said those costs would have to come out of the city's operating budget.
The law says the costs have to be borne by the employer, in this case, the city, Mr. Riordan said.
Pointing to a log jam of promotional opportunities, particularly among women and minorities, Mr. Portune said the retirement changes could provide opportunities while cutting the number of city employees.
This makes our retirement package attractive, he said. We are not going to lose anything.
Mr. Shirey said there is no need to make the city's retirement system any more attractive than it already is.
We have no trouble attracting employees, we have no trouble keeping employees, he said, adding that he doesn't want to lose experienced employees. I think one of my worries, other than money, is that this could be a serious brain drain.
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