A Baltimore Sun news report said actuarial data from Mercer indicated the largest chunk of potential savings – some $64.5 million – would come from replacing a variable benefit with a fixed cost-of-living increase. Retirees currently receive a benefit that increases during good market years but does not decrease during poor years.
Under the proposal, the variable benefit would be scraped in favor of retirees between the ages of 55 and 65 getting a 1% annual increase and those over 65 a 2% annual benefit hike. Union leaders are pushing for a cost-of-living increase directly tied to Social Security rates, according to the Sun.
Other proposed changes, including postponing retirement (until years of service and employee age total 70), increasing employee contributions, and cutting an incentive to those who work past the 20-year mark, could save the city $29 million. Most employees are now able to retire after 20 years of service.
The newspaper said controversy over the proposed changes and intense union opposition will likely mean local lawmakers will end up getting a completely new pension change measure or at least one with substantial modifications. Meanwhile, the cash-strapped city will have to come up with an additional $65 million in the next six weeks to fund its pension obligations.Even with reforms, the city’s contribution to the pension system is expected to climb about $20 million next year, Thomas P. Taneyhill, director of the public safety pension, told the newspaper.
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