WASHINGTON - Trustees for the $4 billion District of Columbia Retirement Board are hoping to become the third-party administrator if the federal government does indeed take over the city's pension funds.
In January, federal officials started crafting legislation that would ease the District of Columbia out of its financial problems. The legislation contains a provision that would hold the federal government responsible for the pension plans' $4.3 billion unfunded liability. A draft of the legislation obtained by Pensions & Investments says assets would be frozen and transferred to a third-party trustee to administer the plan and invest assets.
Starting after fiscal year 1997, the federal government would stop its $51.2 million annual contribution to the fund that originally was scheduled to continue until 2004. As part of the home rule agreement established in 1979, Congress was expected to pay $51.2 million annually to help pay for the $2.6 billion unfunded liability it gave the district when it transferred the funds to the retirement board.
Retirement Board Chairwoman Burna Gunn-Williams says board members have met with government officials and are trying to be included in the legislative process.
"We are just very concerned about what will happen," she said, adding there is no promise in the draft that the next administration must continue the current administration's efforts.
Meanwhile, the Financial Control Board, which is expected to come up with a separate plan to salvage the district's financial condition, issued its report on district pension funds. It recommended the federal government finance the unfunded liability.
There was no mention of the government assuming management of assets, but the report did say "any consideration of transferring the assets should place the highest priority on minimizing the possibility of creating an additional unfunded pension liability for the district government and the plan participants."