Nothing to worry about.
A City of St. Louis pension task force formed in 2005 is toiling away to bridge a multimillion-dollar funding gap, but evidently some city employees are just as nervous about the tinkering as at the prospect of retiring broke. To paraphrase one city employee:
What are they going to screw us out of?
City Operations Manager Ronald Smith recently issued a memo to dispel rumors about what the task force has cooking. The short answer, boiled down from this memo (reproduced on the jump):
Nothing you've already banked, but don't count on cushy benefits in the future.
The backdrop for all this is a lawsuit brought by police and firefighters, who oversee their own funds within the city's vast pension system. In a decision issued this past March, the Missouri Supreme Court sided with police and firefighters. According to a story in the St. Louis Post-Dispatch, that ruling would add $23.9 million to the city's liability ($18.5 million for firefighters, $5.4 million for police).
For more information on the city's pension liability, go here.
May 18, 2007
Dear City Employees:
RE: City Pension Information
As most of you know, the certified cost of the City's three pension systems is far higher than what the City can afford without a dramatic impact on City services and City employees. In the current fiscal year, the three systems requested $65 million from the City. The City was only in a position to allocate $30-million.
If the city were to cover the current and expected future actuarial requirements of its three pension systems without addressing the underlying fiscal challenges, the impact on services and employees -- both in terms of how many employees we could afford and how much we could afford to pay those employees -- would be very negative. We don't want that.
Making sure your pension is there when you need it is very important to us. So, we are fully committed to developing a comprehensive plan to fix the pension systems. A city pension task force at work for the last year-and-a-half built a strong foundation for such a plan.
It is important that you understand that any benefit that is vested and has accrued in your name cannot and will not be taken away. If the City does change the terms of the pension plans, it will honor all vested and accrued pension benefits under the terms, conditions, and rules up to the point in time when plan changes are made.
But it is also important that you understand that, in all likelihood, more funding for the pension systems will soon be proposed, together with changes to the three pension systems that will affect the plan going forward. The City is looking for a balanced approach that is fair to everyone and that will put our pension systems on a firm financial footing for the future.
I hope this answers some of the rumors that have circulated. If you have any questions, feel free to send me an e-mail firstname.lastname@example.org.
RONALD H. SMITH City Operations Manager