Radical changes that could drastically reduce the generous-and, for taxpayers, expensive-retirement benefits to former employees of city of Cincinnati and future pensioners seem to be on the road to the Town Hall.
With the system of retirement troubled city struggling to dig a hole of long-term billion $ 1, a new pension card-one that outside financial experts recently replaced city officials with personal stakes in the decisions-is exploring changes to lower performance, raise the retirement age and retirement pensions Cap well below the ceiling of 90%-of-current salary.
While the details remain to be processed, pre-proposals would cut benefits for many retirees future from about $ 10,000 a year. Some older workers closer to retirement, however, not be prejudiced.
Some Trustees Wading in territory legally murky, hope also to examine possible changes to the benefits that are paid for current retirees and beneficiaries.
Until now, city officials held that controls basic monthly pension pensioners-even if their health benefits-are legally untouchable. However, with benefits for retirees and beneficiaries that involves more than two thirds of pension liabilities, some Trustees want to take a look at what, if any, are options to limit the benefits already being paid.
Recommendations of the directors should go before the municipality by the end of the month.
Judging from the past, when much less severe pension changes were planned, which will set the stage for a showdown in which disputes may provide dozens of retired furious and city employees to descend on the municipality. Next meeting of the trustees of 19 November-when can act on proposals-could lift the curtain on the battlefield.
"This is the definition of a rock and a hard place," a new trustee, retired actuary Bill Partridge, said the Board this week in the formulation of daunting challenges for the system.
Several factors-unusually lucrative benefits, a catastrophic loss of 27 percent the stock market meltdown of 2008, soaring health care costs, years of inadequate funding by the municipality and the increased life expectancy, among others, have left the Pension Fund of $ 2 billion in front of a long range projected deficit of $ 1 billion.
Partridge, however, said more sensible, more realistic analysis of assets and expected future contributions would widen that gap of $ 2 billion.
"We are really at a turning point," Pernice said.
"If we start now, changes will be too late."
Without major changes, consultants have said the town, the Pension Fund may be exhausted by 2028, forcing in Cincinnati to pay for tens of millions of dollars in annual pension of his budget. Trust retirement pay now about 200 million dollars in retirement benefits and health care each year-a figure which consumes approximately 56% of the General Fund of the city 359 million, absurd scenario.
Looking for ways to stabilize the Fund without decimating, trustees are working from proposals made earlier this year from a city-appointed task force-approving certain concepts, rejecting others and putting forth the new suggestions.
One of the task force potential financing ideas-a large immediate cash infusion of hundreds of millions of dollars, more likely, even if the bond issue-was rejected as economically realistic of Partridge report to the Board.
That point highlighted a telling contrast between the new trustee-pension, accountants and investment with no common financial constraint-and the members that, as the city of current or former employees, could see their pensions concerned by the changes.
Workers ' representatives of border more lobbied for the infusion of cash, which could moderate future benefits cuts or more contributions on wages of workers.
"Cash infusion That could solve a lot of problems," said city building inspector Mike Fehn, claiming that the pension obligations would be a bargain with interest rates at historic lows.
If there is no cash infusion, which necessarily discussion on how to bring the pension system costs more in line with its heritage-to-benefit reductions.
Potential changes considered would be:
Basic Pensions on five highest years salary workers, two years older than the current formula. This change could reduce "peaks of pension" by employees who try to large amount of overtime to increase performance.
Calculate pensions on up to 30 years of service. That, too, would be less future benefits, because current policy, employees working in 36 years can earn up to 90% of their final average salary.
Replace the pensionable age and seniority rules, which allow some individuals to retire in their 50s, with those that require more than work until at least 65 to gain all the benefits.
Delete $ 7,500 death benefit and pensioners, with some exceptions, other benefits and medical coverage now given to spouses and survivors.
Increase coverage of health cost for many retirees, among other things, forcing them to pay 100% of the premiums for dental and vision care.
Delete a guaranteed 3% compounded annual increase in cost of living, replacing it with a linked to inflation rate and based on simple interest.
Preserving the future benefits earned to date, the employees of the city, while their placing under new guidelines for the duration of their work of city that typically would lower their pensions.
For example, under the current formula, a warden of 60-year-old city with 28 years of service and final average salary of $ 60,000 would be eligible for a pension $ 42,000 a year that would grow by 3% each year. The new proposal, however, would reduce retirement at $ 32,540 with a lower annual adjustment.
While some retirees and employees would be exempt from some changes, the new rules would change significantly the financial future for many people in your city.
"I'm having a hard time swallowing a $ 10,000 cut and having to pay full health care," said trustee Karen Alder, an employee of the city of 17 years, which is an analyst of the Department of finance.
Partridge, however, stress that even with the proposed changes, city pension benefits "still would be very, very competitive" with most private sector plans.
There is even a bigger problem to keep in mind, said Partridge. "I recognize that this is totally dramatic change," he said.
"But our whole goal is to understand how to make the plan last long enough ... so that everyone gets the benefits in the future."
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