Reed, who campaigned on pension reform, revealed a two-part proposal on Wednesday. The program does not touch the pension earned by current employees, and offers two options for the city council to decide on that would resolve the debt, according to Reed.
“The data around the City of Atlantas pension problem is undeniable, said Reed. To let this problem persist is unconscionable. To leave things where they are can leave the city in a posture with a $4.5 billion debt. We don’t have any revenue capacity that addresses a $4.5 billion problem. This would absorb all of government.”
The current pension plan allowed city employees to opt out of Social Security payments with the city investing their pension contributions. However, in the past decade the city has improved pension benefits for workers while investments fell with the economy. The pension crisis is already draining 20 percent of the city budget, according to Reed.
Now the mayor wants to pay off Atlantas employee pension debt in 30 years. Reed said the current plan would allow the pension debt to double in 30 years.
The mayor also spelled out two different options for the city council to decide. Option 1 allows all employees to contribute 6 percent of their pay to the pension fund, and that amount is matched by the city. Reed said the option reduces the citys pension liability by up to $31 million in the first five years. The mayor and 1,000 of the citys highest paid employees are already on a similar plan.
The second option allows for employees to reenter the Social Security system with an 8 percent match from the city. Employees who decide against Social Security will receive a 12 percent match. Reed said the second option would save the city up to $18 million dollars in 5 years.
Both options provide a pension promise to employees that the city can actually meet. They give the city a long-term, sustainable and fiscally responsible solution to support our employees through retirement and will allow us to recruit and retain great employees, Reed said.
The mayor’s recommendations come after the work of an independent pension review panel formed by Reed in 2010.