Bob’s Position on the Retirement Fund
We all want a viable and sustainable pension fund. When I took office in 2006, we immediately established a Pension Task Force. This process resulted in actions such as hiring new fund managers, saving approximately $300,000 per year, and moving 90% of the fund to the larger State pension fund. In 2006 and 2007 all four city unions and school department unions agreed to increase employee contributions to the pension fund while modifying benefits to reduce costs.
Recent concerns about the current status of the fund have been exaggerated. And, the proposal to switch to a defined contribution system for new employees does not address the most significant demand on the fund, which is the City’s liability to employees hired before July 1, 2007. Not only does this proposal fall short of solving the problem, it will also make recruiting and retaining police officers and fire fighters even harder for the City.
Moreover, the entire country is in a market downturn. To make policy decisions based on a snapshot of the market, in the middle of the fiscal year, is not an appropriate or responsible way to talk about the pension fund. The analysis should be over a much longer term. The City Council voted for an increase in benefits in 2000, when the stock market was up. Now some want to institute a major change when the stock market is down. It was the wrong decision in 2000, and it’s wrong now to make decisions based on the same short sighted kind of analysis.
The City has taken real steps to address the pension fund and will continue to pursue reducing the fund liability, but in a thoughtful and fiscally responsible way that recognizes and respects the needs of the City and its employees.