News Column

Rogero proposes adding two seats to Knoxville Pension Board

June 25, 2014

By Tony Hernandez, The Knoxville News-Sentinel, Tenn.

June 25--Knoxville Mayor Madeline Rogero on Tuesday said she will propose to City Council the addition of two new seats to the city's Pension Board.

Those seats would be filled by people who are not city employees or members of the pension system. The change, if approved by council members, would need voter approval in November.

Rogero, who is chairwoman of the Pension Board, sent an email to council members on Monday explaining her proposal, in addition to four other proposals relating to issues discussed by the Pension Board this year, including beneficiary eligibility for lifetime pension benefits.

"These (proposals) are making some tweaks and some adjustments, which I believe, will help us to instill public confidence and to continue to protect the fund for what it's supposed to do," Rogero said.

The city's charter requires the board to be filled with two representatives from the general government and two from uniformed employees, each elected by their peers. The charter also appoints the mayor, the finance director and one council member to the Pension Board.

Rogero provided on Tuesday a report stating the Government Finance Officers Association and the Civic Federation have concluded within the last eight years that pension board compositions should be balanced with employees, management and residents.

Rogero said new members would be required to have extensive experience and knowledge about investments, pensions and retirement planning.

She said she plans to bring her proposals to the Pension Board at its July meeting. The board will need to review for "form and effect" but does not have to approve them before reaching the City Council.

She plans to bring her proposal to a City Council work session July 17. This process is similar to one she took in 2012 when voters were asked to close existing pension plans and create a hybrid for new employees, she said.

Greg Coker, vice president of the Pension Board and a Knoxville Police Department employee, said Tuesday he believes the board already receives plenty of financial advice and discussions from Summitt Strategies, the board's investment consultants, other investment managers, the consulting actuary and others.

"The money managers we have now are very much primarily responsible for the more than $200 million we have recovered since our low point in 2009. ... So the (board) additions, they will add to the board's expertise, but I'm not sure I see the need for it," Coker said.

Coker said public confidence issues should be countered with an effort to educate the public about the pension system, including how it invests employee and taxpayer dollars.

The Pension Board on June 13 blocked a proposal that would limit an employee's option to choose a son, daughter or any nonspouse for lifetime pension benefits, known as the Joint and Survivor option.

Rogero said she was surprised and disappointed by the decision, especially because board members had earlier indicated they supported the change.

City employees have the option of naming a child as the beneficiary of their pensions. Should they die before they retire, 143 current city employees may pass on lifetime annuities to their children that add up to millions of dollars. The provision costs taxpayers millions for a benefit to people who, for the most part, have not worked for the city and receive those benefits throughout the prime of their lives.

"Until the city moves to a 401(k) plan like almost all local employers, we will continue to need expensive actuaries, lawyers, investment advisers, pension managers, and a Pension Board," said City Councilman Marshall Stair.

"In this complex system, it is imperative the perspective of taxpayers is represented on the Pension Board as it faces future funding challenges."

Kevin Faddis, president of the Knoxville Firefighters Association, said he plans to meet with the mayor next week to learn more about added seats to the board.

Faddis did question whether there would be enough checks and balances.

Rogero wrote to council members that there are such protections in place.


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Source: Knoxville News-Sentinel (TN)

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