June 22, 2007
More pension deal details

Today's story on the pension deal fills in a few blanks.

The city's annual financial contribution, which increases with the liability, had been a source of contention in recent weeks. White has defiantly stated that the city couldn't afford a higher payment without getting rid of hundreds of employees. That prompted David Long, the fund's executive director, to hint about a possible legal fight.

Then, Thursday morning, city employees found an e-mail and telephone message from White announcing the deal.

"As your mayor, I deeply value your commitment to public service," he said in the recorded voice message. "That's why it's important to me, and all within the management of this city, that the pension on which you're planning is secure."

Long, who had been publicly skeptical of White's plans, said current employees should be pleased with the deal. He said the fund negotiated away attempts by the city to replace a popular deferred retirement program, known as DROP.

The two sides also reached a deal with the retirement package remaining a traditional pension plan, long abandoned as too costly by much of the corporate world, rather than a defined contribution plan, similar to a 401(k).

Long said the city also agreed to pay more: $78.5 million in 2009, $83.5 million in 2010 and $88.5 million in 2011.

Among the benefit changes:

  • Depending on years of service, the current plan allows workers to retire fully as young as 50. New employees would not be able to retire with a full benefit until they reach 62.

  • Annual 2 percent cost-of-living increases would be eliminated for new employees.

  • An existing provision extending a full benefit to a spouse upon a retiree's death would be optional. New employees who choose to cover a spouse would receive a reduced monthly payment.

None of that sounds terrible, in the sense that if this had been the way it worked all along it wouldn't strike me as being stingy. But as city employees are the only group we haven't heard from so far (here's one brief reaction), it'd be nice to know what they think - and in particular whether they think future employees are getting screwed - before we put this under the "everybody is happy" banner. We'll see what happens when Council and HMEPS review and presumably approve it.

UPDATE: Here's the HMEPS press release (PDF), via Matt Stiles.

Rod Newman, Secretary of the HMEPS Board of Trustees and Chair of the Board's External Affairs Committee, praised HMEPS and City executives who have worked to come up with an agreement that is a win-win for all parties: "David Long, who was the HMEPS negotiator in the meet and confer process, had many meetings and conversations with the City's negotiator over the last two weeks, and we appreciate his diligence and commitment to get this amicably resolved so the final agreement is in the best interests of everyone."

It's City Council's turn now.

Posted by Charles Kuffner on June 22, 2007 to Budget ballyhoo

...and in particular whether they think future employees are getting screwed

That's pretty much always a given with pension changes.

Each generation just gets screwed a little more than their parents...and as a reward, they also get to inherit the massive debts racked up by their parents' generation on Uncle Sam's Visa card.

Posted by: Tim on June 22, 2007 12:33 PM