After several meetings worth of debate, the Memphis City Council passed major changes to the city’s pension system on Tuesday – and the changes won’t just affect new hires.
Details of the new hybrid plan, reported by Fox Memphis:
Council passed a hybrid plan that was backed by Councilwoman Wanda Halbert that grandfathers in current employees with 7.5 years of experience, effective July 1, 2016.
This plan was introduced by Councilwoman Halbert, who drew harsh criticism from the crowd despite that her plan was approved.
So what does it mean? New hires and city employees with less than 7.5 years on the job will switch over to a new pension system. It mixes a retirement account with a defined contributions plan. Her plan only introduced two weeks ago after Councilman Myron Lowery introduced his plan that would only apply to new hires.
City employees in the crown expressed their anger over the changes. From Fox Memphis:
Members in the audience, many of them city employees, agreed with Councilman Lowery and blasted Councilwoman Halbert saying she had betrayed the city.
“This was an embarrassment to the City of Memphis that they make decisions that are that callous with that little bit of research on he table,” ,” said Kathy Hurley of Memphis. “If you just watch the film and see what all went on it’s obvious the right hand doesn’t know what the left hand it doing. It’s sad.”
Labor groups will likely sue over the changes.
After postponing a vote earlier this month, the Memphis City Council will vote on two competing pension reform measures at their last meeting of the year Tuesday.
Memphis Mayor A.C. Wharton Jr. drew up one of the measures; an alternative to that measure is being proposed by a council member.
Details of the measures from Memphis Daily News:
Memphis Mayor A C Wharton Jr.’s proposal [would] switch all new city hires in 2016 as well as city employees with less than 10 years of service to a hybrid pension plan that mixes a market-based retirement account with a defined contributions plan. City employees with 10 years or more of service would remain vested in the city’s existing private contributions plans.
An alternative by council member Myron Lowery to only include new hires in the change to the hybrid plan was amended two weeks ago, but no final vote was taken on the new alternative put forth by council member Wanda Halbert.
Halbert’s plan would include new hires in the switch to the hybrid plan as well as city employees with less than 7 1/2 years of service.
She made the proposal after saying city employees should be expected to make sacrifices toward making the liability sustainable for the city. Her proposal is based on detailed discussions with Segal Consulting, the Atlanta actuary hired by the council earlier this year to advise it. She also used numbers from PricewaterhouseCoopers, the actuary firm used by the Wharton administration.
Council members in the last month have been discussing whether the city should keep contributions unvested city employees made under the existing plan if they move to the hybrid. Some on the council have advocated a “sweep” of those contributions into a fund that would be available to unvested city employees when they retire.
Halbert’s plan to include those with less than 7 1/2 years of service in the switch had eight votes on the 13-member council two weeks ago. But a final vote was delayed.
Tuesday’s meeting is the last time the Council will meet until 2015.