City leaders are asking Columbia city council to allow them to make significant changes to the city’s benefit plans for new employees. It’s an effort to address the city’s ailing pensions.
Columbia mayor Bob McDavid says the city was $117 million dollars short of the $270 million it’s committed to pay out in employee pensions. After two years of work McDavid and his pension revision task force think they’ve come up with a solution. City Manager Mike Matthes says it should get the pension plan in a healthy position by 2032.
“It gets us so close to the 80 percent that is the industry standard for healthy. That’s kind of the lowest point you can call a plan healthy. We will get to 80 percent over 20 years,” Matthes said.
Representatives from the Columbia Police and Fire departments say they’ve agreed to reduce benefits and eliminate 401-A contributions for new employees to save more than $43 million between them over 20 years. Meantime, new utility and general city employees would no longer have the “80 and Out” rule that allows them to retire when their age and years of service add up to 80. That would save $9.5 million.
Columbia Mayor Bob McDavid says there was little choice but to overhaul the existing pension plan that saw losses growing steadily.
“Uncorrected, these employee promises would grow in 30 years to a stunning 1.6 billion dollars,” McDavid said.
The city will present the plan to the city council on Monday. If approved, it’s planned to go into effect on October 1st of this year.