Houston Municipal Employees Pension System is scheduled to present a plan Wednesday to the City Council to reduce its $2 billion funding shortfall. The plan would provide increased funding, raise eligibility requirements, increase employee contribution rates and lower cost-of-living adjustments, according to city spokesman Patrick Trahan.
The city agreed to contribute $66 million, $69 million and $72 million to the $1.4 billion system in fiscal years 2005, 2006 and 2007, respectively. Of those amounts, $33 million each year would come from a pension obligation bond issue. The city also agreed to issue a note to the retirement system for $300 million secured by the city's interest in the Houston Convention Center Hotel.
The plan, approved by the retirement system trustees on Aug. 18, also would raise retirement eligibility to 75 points - age plus years of service - from 70 points and institute a minimum retirement age of 50. Employee contribution rates would increase to 5% from 4% and the cost-of-living adjustment would be lowered to 3% from 4% for current employees, retirees and survivors. New employees would have a COLA of 2%.
If approved, the changes would take effect Jan. 1.