Eligibility changes to Metro’s employee benefit system could be coming now that a Mayor Karl Dean-appointed committee has recommended adopting 10-year vesting for service pensions, overhauling the current five-year model.
The move, if approved in Dean’s next budget, would require Metro workers devote a full decade of work to the government before becoming eligible for pensions.
On paper, the adjustment –– which the mayor’s Study and Formulating Committee recommended in a March 22 final report –– wouldn’t seem popular for the union that represents Metro workers.
But leaders of the Service Employees International Union Local 205 say they can live with the change because their worst fear didn’t come true: The committee has advised sticking with a defined benefit plan, which guarantees a regular benefit on retirement, and not adopting a defined contribution system in which future benefits are often dependent on the market.
“We’re real pleased to see that they’re recommending we stick with a defined pension benefit,” said Doug Collier, president of SEIU Local 205. “It’s saved many people over the years from being in poverty. It’s something that they’ve worked for, something they could count on when they’re in their retirement age, and something that whether the economy is up or down, they have a dependable revenue source coming in each month.”
“We have no qualms or problems with that whatsoever,” he said of 10-year vesting. “We want to make sure the career workers are taken care of.”
The five-member Study and Formulating Committee, which the Metro Charter requires the mayor appoint every five years, has met since May to study the health benefits and pension plans for city workers. Drastic modifications weren’t warranted, the report found.
“We did not conclude that there was a financial crisis related to pension and benefits that warranted major changes in the system,” the committee’s final report stated.
“The committee was in agreement that the current defined benefit plan platform for Metro’s pension system appears to still be well funded, managed and appropriate at this time,” the report continued.
Dean’s administration is set to propose a budget for the 2012-13 fiscal year in May. Employee benefit changes would be subject to Metro Employee Benefit Board and Metro Council approval.
“When we started this process, the whole idea was there’s a balancing act between fiscal responsibility and making sure that you have a good system of benefits for employees,” Metro Finance Director Rich Riebeling said.
“They looked at a number of options,” he said. “What they’ve done is made tweaks to the system that bring us more in line and more in conformity with the industry standard.”
Moving to a 10-year vesting requirement would actually signal a return for Metro. The city had a 10-year requirement until 2001, when former Mayor Bill Purcell changed the system to five years.
David Manning, Purcell’s finance director, said the administration made the move to put Metro in better position to compete with the state for employees. “The state has five-year vesting,” Manning said. “Particularly, when you’re trying to attract someone who has an opportunity at the state, that becomes a significant factor.”