Public employees in Fort Worth, Texas voted in favor of a new pension contribution plan in a move to eliminate the city’s $1.6 pension funding shortfall. As a result, the city has declared its funding problem for the Fort Worth Employees’ Retirement Fund “solved.”
Just under 75% of the city’s nearly 6,600 employees voted on the plan, which was approved by over 59% of those voters. The plan is expected to cost city taxpayers an extra $21 million per year, according to local news reports.
“I am thrilled to announce pension results are in and our employees overwhelmingly voted in favor,” said Fort Worth Mayor Betsy Price in a Tweet. “Fort Worth successfully solved this locally.”
According to the changes, all general employees will contribute an additional 1.1% to the pension beginning July 20; general employees with service prior to October 1, 2013 will also pay an additional .7% for the same amount of time. The current structure of the cost-of-living adjustments (COLA) has been completely preserved for all general employees were hired before July 1, 2011 who retire or enter the Deferred Retirement Option Program by January 1, 2021.
Contribution changes for city firefighters and police officers will also begin July 20, 2019. All firefighters will contribute an additional 3.8% toward the pension solution, which will be phased in over the next two years. Beginning with the July 20 pay period, their contribution will increase 1.8%, and beginning with pay period 1 of 2020, it will increase by an additional 2%.
The current structure of the COLA has been completely preserved for all firefighters who were hired before Jan. 10, 2015 who retire, who retire who retire, who retire early with a penalty, or who enter the deferred retirement option plan (DROP) by Jan. 1, 2021. These firefighters will receive either an ad-hoc COLA, or a simple 2% COLA for their years of service earned before July 20, 2019, depending on their previous individual choice.
If the health of the pension is not restored by changes to the benefit and contribution increases, a risk-sharing mechanism will kick in during 2022. If that happens, all active members will contribute an additional 1.6%, with the increase limited to 0.8% in any one year. Any further changes would require city council adoption and potentially another council vote.
And Forth Worth police officers will contribute an additional 3.8% toward the pension solution, which will also be phased in over the next two years. Beginning with the July 20 pay period, their contribution will increase 1.8%, and beginning with pay period 1 of 2020, it will increase by an additional 2%. Beginning with pay period 1 of 2021, their contribution will increase by .6%.
The current structure of the COLA has been completely preserved for police officers hired before Jan. 1, 2013, who retire, who retire early with a penalty, or who enter DROP by Jan. 1, 2021. These police officers will receive either an ad-hoc COLA, or a simple 2% COLA for their years of service through July 20, 2019, depending on their previous individual choice.
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Tags: Cost of Living Adjustments, Fort Worth Employees' Retirement Fund, Mayor Betsy Price, Pension