The City of Cincinnati, along with retirees and various unions representing current employees, have reached a deal to fully fund the city’s pension system within 30 years.
A statement from Cincinnati Mayor John Cranley’s office says recent estimates put the unfunded pension liability at roughly $862 million.
Terms of the agreement include:
- $200 million in retiree health care savings;
- The cost of living adjustment (COLA) for both current retirees and active employees will go to 3% simple interest, instead of compound;
- Current employees and retirees will take a three-year COLA holiday; and
- The city will make a larger contribution to the pension annually for the next 30 years—news reports say the city will pay 16.25% of payroll annually.
According to Reuters, voters rejected an initiative in 2013 to shift new city workers to defined contribution (DC) plans.
“This settlement provides certainty and secures our financial position. The process to bring us to this point has not been easy, however I applaud all the parties for their diligent work and commitment to finding a resolution. This outcome will pay dividends for the city for generations to come,” Cranley said in the statement.