After two pension trustees questioned the retirement system’s calculation of the city’s share of annual employee pension costs, the system’s top staffer replied Wednesday to the trustees’ hunch that employees were not paying their fair share.
Pension trustees Tom Hebrank and Bill Sheffler said they were concerned that the city was paying as much as $10 million more in pension costs this year than they should under the City Charter, which proscribes that the annual cost be split into “substantially equal” amounts between the city and its workers.
Of this year’s annual normal cost, which includes only the costs accrued for the current year and not any of the $1.4 billion deficit, the city paid 57 percent and the employees paid 43 percent.
Pension Administrator David Wescoe said that the normal cost includes all of the auxiliary benefits, including death and disability benefits. However, he said, actuaries generally don’t include death and disability when calculating city and employee costs.
Doing that results in the city and employees paying exactly 50 percent of these costs, Wescoe said. He said the retirement system’s actuary is reviewing this question further as part of a larger study of the pension plan’s financing.
Read Wescoe’s response here.