Get more! Sign up for PLANSPONSOR newsletters.
Administration September 20, 2011
Missouri City Pension Fund Has $118M Shortfall
Four pension plans in Columbia, Missouri owe nearly $118 million more in benefits than they are bringing in from investment returns and contributions for almost 1200 city employees, reports the Columbia Missourian.
Reported by Tara Cantore
According to the article, projections indicate it will get worse, based on a report by the mayor’s Pension Review Task Force.
The problem isn’t the $117.8 million gap specifically, since payments are not due immediately. The real problem lies in the money the city will have to pay retirees in the future, which is growing faster than the amount of money the fund is generating.
The mayor’s task force warns “it will require a substantial and growing financial commitment of city resources to adequately fund these plans without changes.”
To help reverse this trend, City Manager Mike Matthes proposed shifting new police and fire department hires to the state-run LAGERS pension fund, which covers other city employees, rather than the city-run fund.
Under the state-run plan, Columbia’s police officers and firefighters would earn less money when they retire, which means the city will have to contribute less to meet its obligations to them.
This would reduce the city’s annual contribution by nearly 24% for police and more than 34% for fire. Moving new hires to the state plan was one of the six options suggested by the task force, which was formed last year.