The Clinton administration's proposal to bail out the District of Columbia includes a provision to take over the city's pension plans and its $4.3 billion unfunded liability. The details, released today, show that assets of the $3.7 billion District of Columbia Retirement Board, which covers the district's police, fire, teacher and government employees, would be frozen and transferred to the federal government. Existing assets would be used to pay beneficiaries.
The district would set up a new system to accommodate new employees. Treasury Secretary Robert Rubin said the district would be required to fully fund the new plan ``from day one going forward.''
Starting in 2007, the federal government would start making annual contributions of about $400 million to pay off the district's current $4.3 billion unfunded pension liability. About $2.6 billion of this was transferred to the district by the federal government when home rule was established in 1979.