A ballot initiative in Cincinnati's citywide elections on Tuesday proposes an amendment to the city's charter that could create a new defined contribution plan as well as require the Cincinnati Retirement System to reach a 100% funded status in 10 years.
The proposal does not close the city's $1.4 billion defined benefit pension plan but requires paying off the retirement system's unfunded liabilities in 10 years and changes some benefit and cost-of-living-adjustment requirements.
According to Chris Meyer, chairman of the pension fund's board of trustees, the city has several issues with the ballot initiative.
“You'd have to pay off the unfunded liability in 10 years, which could be $800 million or something like that. The city would have to contribute $80 million a year,” an amount far out of reach for the city, Mr. Meyer said in a telephone interview.
“The proponents of this ballot initiative never talked to Paula (Tilsley, the pension fund's executive director), or anyone in the city so there's some confusing language where one place will say one thing and one place will say another,” Mr. Meyer said.
Among the contradictions is a clause in Section 3 of the amendment. Current retirees' payments would be capped at 60% of the average of an employee's five highest years of base compensation, down from 90%. The section then states “nothing in this section shall be construed to reduce benefits accrued to the passage of this amendment.”
“It would likely be tied up in the courts for a while if it passed, and the city would be in a world of hurt because it would have pay $800 million over 10 years,” Mr. Meyer said.
The amendment also gives current employees the choice to stay in the defined benefit plan or choose to move to a newly created defined contribution plan. Details on the DC plan are not provided in the amendment.
As of Dec. 31, the plan had an actuarial asset value of $1.37 billion and liabilities of $2.23 billion.
Ms. Tilsley and Don Beresford, city finance manager, did not return phone calls by press time.