Faced with rising pension costs and investment losses, Alexandria officials are mulling changes to pension plans for city employees, and may require employees to contribute more of their own salaries to their retirement. There are laws governing how much a city employee may contribute to his or her own retirement, depending on when an employee was hired and where he or she works, said Bruce Johnson, Alexandria’s chief financial officer. But raising the contribution rate by 1 percent for all employees could save Alexandria $2.3 million in fiscal 2012.
Any immediate changes to the pension plans will be presented as a part of the city manager’s proposed budget in February. To sort out long-term solutions, the city council is considering setting up a retirement benefits advisory group to investigate the structure of the city’s pension plans.
“A lot of people are already in the pension system, and we have to honor promises that were already made. But I think going forward, we have to take a different look at how we’re doing this,” said Councilman Frank Fannon, who supports the proposal to create the panel, which would include representatives of city employees, the manager’s office and the public.
That panel would provide a final report to the city council in November, a deadline that gives city officials enough time to consider the panel’s recommendations for the fiscal 2013 budget.
As of October 2010, the city was managing pension plans for 1,350 retirees and beneficiaries. The city is scheduled to contribute $32.9 million toward employee pension plans in fiscal 2011, a jump from $13 million just five years before. That contribution is expected to grow another $2.3 million in fiscal 2012. And it’s growing at a time when the city’s 2012 budget forecast shows little or no future growth in revenues.
One positive sign is the recovery of Alexandria’s retirement trust fund, which was hit hard by the recession but which grew by nearly $50 million over the last six months. Still, officials are still concerned about the long-term outlook of the city’s retirement investments.
