The move would only apply to new employees and those with less than 10 years experience.
On Tuesday, experts that the
A final vote on a new retirement plan would follow on
Retirement systems typically put money into stocks and other investments. A key difference between them is how the performance of those investments affects the size of retirement payouts.
Municipal labor unions want the city to keep workers in the current traditional pension, which offers guaranteed payouts for life. By contrast, a 401(k)-style plan offers less security for the employee because payouts can rise or fall based on the performance of investments.
Advocates of a 401(k)-type plan say it would help the city avoid having to make huge contributions of taxpayer money to the pension fund when market fluctuations drive down the value of investments.
The Segal experts will also likely show the impact of a hybrid plan that includes elements of a traditional pension and a 401(k).
The city's pension fund owes far more money to retirees than it has on hand, in large part because the city has contributed less to the fund than actuaries recommended.
Experts have offered different estimates of the shortfall at different times, but the
The city faces pressure from state officials and bond rating agencies to fix the problem.
Mayor A C Wharton's administration has proposed two main measures to deal with the shortfall. The first approach is to contribute much more money to the city's pension fund.
Much of the money for the increased contribution comes from reducing subsidies for retiree health care.
The Wharton administration's second proposed solution is to change the design of pension benefits by moving to a 401 (k)-style system. Laws limit the city's power to change the pension benefits of current retirees and vested employees, so any new plan would only affect newer workers.
The city would have to keep its traditional pension fund for decades as today's vested employees and pensioners live out their retirements. At his last appearance before the council, Segal expert
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