Commission advances pension restructure options; staff says changes could strengthen fund and add voluntary alternatives

The commission advanced an ordinance on first reading authorizing two additional retirement plan options for city employees: a defined-contribution (DC) plan and a hybrid plan that mixes a smaller defined-benefit (DB) component with a DC account. The measure preserves the existing defined-benefit plan as an option for current and future employees.

City staff and pension advisors told the commission the changes were negotiated with AFSCME during collective bargaining and were designed to increase recruitment and retention by offering more choices. Staff said the new options would be voluntary and that for current employees choosing the DC plan the city would provide an 8% employer contribution that the employee would contribute back (a structure intended to satisfy Internal Revenue Service rules change sometimes referred to as CODA). The city’s actuary told commissioners the ordinance should speed payment of the pension fund’s unfunded liability and improve funded ratio projections compared with keeping only the existing DB plan.

Several retirees and other members of the public spoke during the public hearing, expressing concern that adding choices might harm retirees. Pension staff and the city manager responded that the ordinance will not remove benefits from current DB plan participants, and that the actuarial analysis indicates the fund would be stronger and the unfunded liability would be reduced sooner if the new options are available.

Union leaders representing AFSCME said they initially opposed alternatives but later supported them because members had asked for options to “have more money now” and for additional paths to retirement. City staff said record keeping and implementation work will require additional administrative support in the pension office and the pension board will select a record-keeper for the DC accounts.

The ordinance was approved on first reading by roll call; staff said implementation work aims for a January 1 effective date and that additional administrative steps — including vendor solicitation and communications to employees and retirees — remain to be completed.

Why it matters: The change creates new, voluntary retirement pathways for city employees while pension staff and actuaries say the mix could lower the city’s long-term pension burden and move the plan to a healthier funded ratio sooner. The proposal drew significant public comment from retirees seeking clarity about protections for current beneficiaries.