The city is seeking “shared sacrifice” in its pension talks with Police and Fire Pension Fund.
The fund said it wanted to share, too — but in the form of a share plan that would provide extra benefits for its members.
In the latest round of talks Tuesday, fund administrator John Keane proposed the idea of starting the share plan, a form of defined contribution plan funded by employees that could provide extra benefits starting in 2020.
How it would work: Police and fire employees pay 4 percent in insurance premium taxes, known as chapter funds, in addition to the current 7 percent they pay toward their retirement plans. Those funds now go toward paying bonuses for retired employees and contributing to the pension plan.
Under Keane’s proposal, the fund for the next four years would put in an additional 4 percent worth of chapter funds from its reserves, decreasing the amount 1 percent each year until 2020.
A tentative agreement in place ultimately would have current employees paying 10 percent of their salaries toward their retirements. Those chapter funds wouldn’t provide extra benefits for new employees and the fund would then phase out those premium taxes.
Instead, the share plan could provide those extra benefits after the fund’s pension obligations, such as a proposed $4.5 million annual payment toward unfunded liability, are met.
To accrue those extra funds, Keane is pushing for the fund to participate in a wider, riskier range of investments — an idea that’s been rebuffed by City Council.
The city, though, questioned whether the fund should be setting up a new benefit plan while there is still more than $1.6 billion in outstanding unfunded liability.
Chris Hand, Mayor Alvin Brown’s chief of staff, said the city will review Keane’s share plan proposal.
Still not decided are possible changes to the cost of living adjustments and Deferred Retirement Option Program. The city has proposed capping the adjustments at 1.5 percent annually, down from 3 percent, while Keane mentioned the idea of tying the rate to Social Security rates of return.
And, he still hasn’t moved from the 8.4 percent guaranteed rate of return the DROP plan currently has. The city wants to make it a range from 0-10 percent and tied to actual return rates.
Keane will have responses to both this afternoon.
Governance changes also were tentatively agreed upon, with Brown dropping his pursuit for the fifth member of the fund’s board. That would be in exchange for language changes in the qualifications of the board members and fund’s next administrator, among other changes.
But, on the same day the two sides were trying to finish up those governance issues, two City Council members had an idea for how that fifth member should be selected.
Council member John Crescimbeni and President Bill Gulliford met Tuesday to talk about legislation the former said he will file that will make the mayor responsible for selecting that fifth member.
The board is made up of two council-appointed members and two public safety officials elected by their peers. Those four members appoint the fifth, with Keane calling changing the system a nonstarter for pension talks.
Crescimbeni wants to file the legislation and put the issue on the ballot.
“While Mr. Keane may not want to talk about it, I think the people who get stuck with the bill each year to make the PFPF solvent — the taxpayers of this city — do want to talk about it,” he said in an email.
Crescimbeni said Tuesday evening he was preparing draft legislation and would soon finalize and file it.
The next discussion between the two sides is at 1:30 p.m. today, with the final scheduled meeting at 1:30 p.m. Thursday.