Mayor Reed Presents Pension Reform Options

Security, or up to 12 percent for those who opt out. This second option reduces the city’s annual required contribution by between $12 and $18 million in the first five years.

“Both options provide a pension promise to employees that the city can actually meet,” Reed said. “They give the city a long-term, sustainable and fiscally responsible solution to support our employees through retirement and will allow us to recruit and retain great employees. That is the right path forward — financially, morally and ethically.”

Shortly after his inauguration in January 2010, Reed appointed a Pension Review Panel, chaired by former Atlanta Journal-Constitution publisher John Mellott and composed of business leaders, city officials, employees and other key representatives, to study options to reduce the growing cost of the city’s pension obligations. Those have grown exponentially over the past decade, bringing the city’s unfunded accrued liability to $1.5 billion.

In January, the panel presented pension change options that ranged from changing the maximum cost-of-living adjustment (COLA) to ending the retirement system completely and providing employees a personal retirement system. The review panel highlighted seven options out of 17 that were analyzed.

The panel found that Atlanta’s current pension system is costing more than the pension plans of similar cities across the region and nation. The higher pension costs for the city are delivering, at best, average benefits to employees while putting the whole system on a path toward an uncertain future in terms of funding.

Among the other findings reported: Atlanta contributes 39.1 percent of each employee’s salary toward pension benefits while its peers contribute 20.8 percent; Atlanta’s pension program is funded at 53 percent versus the national benchmarks of 80 percent of the pension commitment being funded. About 70 percent of the current unfunded liability is due to obligations that have already been accrued.

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