City police and fire unfunded pension liabilities grew by $60M
By By Luke Broadwater
The Baltimore Sun|
Dec 16, 2013 at 10:32 AM
The unfunded liabilities of the city's police and firefighters pension system grew by about $60 million last year, despite recent changes requiring the public safety workers to contribute 10 percent of their pay to the fund.
Unfunded pension liabilties represent how much in contractual obligations the city would be unable to pay if they all came due today. For police and firefighters, the number rose from $712 million to $765 million.
City officials can pay 76.6 percent of promised pensions -- down from 77.6 a year ago -- according to the annual report of the Fire and Police Employees' Retirement System.
The data, which was released last week, "tells us what we already knew," said mayoral spokesman Kevin Harris.
"The funded status of the plan continues to decrease, while the city's annual financial contributions to the plan continue to increase," he said. Harris said Mayor Stephanie Rawlings-Blake's plan in 2010 -- which delayed retirement for many and required increased contributions -- helped "slow down" a downward turn in the pension system's health.
He said further changes are coming. In 2014, the mayor plans to pursue a new retirement system for public safety workers that would function as a hybrid of a 401(k)-style plan and a traditional pension. Such a move would "further strengthen the existing plan by increasing the funded status of the plan," he said.
Bob Cherry, the president of the police union, cautioned against focusing too much attention on unfunded liabilities.
"It's like talking about Armageddon," he said, stessing that the plan is more than able to cover its current payments. Last year, the pension system took in $333.7 million in revenue and had $218.4 million in expenses.
"That's real dollars and cents," he said.
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Cherry added that the changes in the pension plan agreed to by the unions have set Baltimore on a better fiscal course. The report projects that the changes will help the system's funded status to increase to 93 percent over the next 25 years.
The pension system for police and firefighters is not the only one showing obligations greater than it can currently cover.
The pension system for municipal employees faced $681 million in unfunded liabilities as of 2012. Its annual report for 2013 has not yet been released.
Mayor Stephanie Rawlings-Blake has consistently pointed to pension payments as a major driver of the city's long-term financial woes. She has proposed requiring more city employees to contribute some of their salaries to their pensions, while moving to a 401(k)-style retirement plan for new civilian hires.
Earlier this year, the City Council passed an administration bill that requires current city workers to start contributing part of their salaries to their pension fund. That bill required non-public safety workers to contribute 1 percent of their salaries to the pension fund next fiscal year, and increase those contributions each year for five years until workers contribute 5 percent.