City on threshold of pension plan overhaul - Action News 5 - Memphis, Tennessee

City on threshold of pension plan overhaul

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(WMC-TV) - The City of Memphis is on the threshold of a city employee pension plan overhaul, after results of a new study defined the current plan as "unsustainable".

"We need to quit talking and start acting," said Memphis Councilman Kemp Conrad.

The longtime proponent of city pension reform said the new "City of Memphis Retirement Benefit Alternatives" report reveals no surprises about the city's pension fund.

"We've under-funded it by about $50 million each of the last three years," he further explained.

The report shows liability is compounding and the city can't keep up.

"Every year, when we don't put enough money in, the problem compounds and the hole gets deeper," added Conrad.

The three suggestions for pension alternatives are the following:

  • Defined Contribution Plan: The city would carry the investment risk.
  • Cash Balance Plan: Employees would take on the investment risk.
  • Pension Preservation Plus Plan: Both the city and employee share the investment risk.

"Without structural changes to the plan, the liability is going to continue to increase until at some point the plan can't pay out the payments retirees expect," said Conrad.

City Chief Administrative Officer George Little sent a memo to council members saying the administration will hold one-on-one meetings with them in the coming days.

If no changes are made, Conrad says people can expect another tax increase or a loss of city services.

Little's memo said the administration hopes to meet with employee groups as soon as Friday.

The options will be heard publicly at the October 1st City Council meeting.

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