Tue February 18, 2014
New proposal to fix Cincinnati's pension system
A Cincinnati Council member said he had a plan to put the city's retirement system on a path of solvency. Christopher Smitherman introduced his motion Tuesday during a council committee meeting.
One of his proposals is to end the three percent compound cost-of-living adjustments given to most retirees each year. Smitherman would change that to a simple COLA tied to the consumer price index and not exceeding two percent per year. Those adjustments would also be suspended for three years if his plan is approved.
Smitherman said he knows it will have an impact on current retirees.
"If we do not make these changes, the system will fail for all of us," Smitherman said. "There will be no retirement for those who are retired and for those who are working for the City of Cincinnati that have given 30 to 35 years of their lives, there won't be a retirement for you."
Smitherman also wants the city to deposit $100 million into the retirement system, and begin making plans to merge with the Ohio Public Employees Retirement System once the city's plan reaches 90 percent funded. Right now it is 62 percent funded.
He would also reduce compensation for retirement system advisors and fund managers.
"The only suggestion that I have is that doing nothing is the wrong decision," Smitherman said. "We have to take some action."
Smitherman said the city cannot invest its way out of the pension mess. He also said his plan does not work if the city continues to underfund its obligation to the system.
His motion to make changes was referred to city administrators for a report. Council could consider the proposal in two weeks.