The City Controller's plan to offer the majority of pension retirees a one-time payout in exchange for lowering their annual pension payments faced some criticism at Thursday's pension board meeting.
After Controller Alan Butkovitz presented the buyout plan that would transfer Plan 67 pensioners to the less-costly Plan 87 to the board, one of the union representatives on the board Carol Stukes-Baylor said such a deal is like playing Russian roulette.
"I don't like the idea (that) we're asking people who we have gotten into contract with and said 'We're going to guarantee you something for the rest of your lives,' to play Russian roulette with their livelihood," Stukes-Baylor said at Thursday's meeting.
The plan, if approved, would provide a one-time cash incentive to any Plan 67 member who switches to Plan 87. Those who switched would receive a lower pension payment for the rest of their lives. For example, a police officer with a final salary of $75,000 and 30 years of service could get a $41,265 cash payment in return for reducing his or her annual pension from $56,250 to $48,000.
Butkovitz said that the retirees could invest the buyout money any way they wish, even use it to start a business.
The idea is to try to lower the massive pension deficit facing the city. Of the $10.8 billion in liabilities, the city only has 45 percent in the bank.
Stukes-Baylor said that it should be on the city to fix the pension deficit and not the employees. She said the administration should "find a way to fix it without asking the members to be burdened down or to consider trying to hit the lottery and, you know, in three months you gonna be broke and they are gonna try to sue us for putting them in this awful position."
Butkovitz fired back saying that he can't go back to Mayor Rizzo and Mayor Tate and ask for the money he says their administrations didn't contribute.
"The problem is we're looking down the road and crashing into a wall," Butkovitz said, referencing the bleak outlook for the fund. "The issue is what tactic do we use that is going to be the fairest way of maintaining benefits for people, while maintaining the ability of taxpayers to sustain the system?"
If all 33,000 members in Plan 67, including retirees and active employees, were to switch over, the city would reduce its $5.9 billion unfunded liability by $1 billion, according to an actuary report. The cost for the cash incentive to switch over would cost the city $514 million.