Funding for pension and healthcare
CMERA’s mission is to advocate for the interests of retirees, and to work with the Retirement Board, City Administration, and other stakeholders to assure long-term stability of the retirement plan. CMERA Past-president Tom Gamel and I are two of the three retiree trustees on the Cincinnati Retirement Board. CMERA member Bill Moller is the third retiree member; he serves as Chairperson of the Board.
I’m writing today to share two letters from the Retirement Board to the City administration regarding the pension trust fund and the healthcare trust fund. These letters, dated January 17, 2023, result from the Board’s ongoing concern about adequate funding for these trusts.
First, regarding the pension fund, the Collaborative Settlement Agreement (CSA) calls for 100% funding of the CRS pension trust by 12/31/2045. One hundred percent funding means that the pension trust has enough money to pay for 100% of the benefits that all current and future retirees are entitled to (including benefits to optionees, survivors, dependents). The CSA says the city annual contribution to the pension plan shall be at least 16.25% of payroll, but that percentage is insufficient. Each year since the CSA went into effect, the city has contributed only the minimum 16.25% of payroll, taking the position that this amount is in compliance with the CSA. Meanwhile, the Retirement Board’s actuary projects that a flat 16.25% annual employer contribution will not be enough for the plan to reach 100% funding by 2045.
The Retirement Board’s letter presents alternatives for increasing city contributions to the pension fund, together with the actuary’s projection of what will happen if the city continues to contribute only 16.25% every year until 2045.
Secondly, the CSA also provides that the city will adopt a funding policy for the healthcare trust. This is the fund that pays for our healthcare and Rx drug benefits. In the past few years, this trust has been funded at or above 100% (although results from 2022 are not yet available). There have been no contributions to this fund from the city for more than ten years, and at this time a city contribution is not necessary. However, things can always go south, as the volatility and negative investment performance of 2022 have demonstrated. The healthcare trust funding policy is basically an action plan in case adverse economic conditions arise and the healthcare trust declines.
The city administration developed a draft policy and asked the Retirement board for its input and recommendations. With the second letter, the Retirement Board provides this input to the city manager for the funding policy.
Please read these letters carefully. Talk to other retirees and to people you know who are still working. Feel free to share them; they are public record. You can download them from the link below.
The city is now beginning its budget process for next year, and we at CMERA are discussing how best to bring our concerns to the attention of elected officials and decision makers. We would like to get an earlier start than in past years, and not wait until budget hearing time when decisions are pretty much already done. Contact us, tell us your thoughts, and help us reach out. As always, thank you for your support.