City Hall will get a $1.4 million break next year on its annual contributions to two major city employee retirement programs.
The city’s contribution rates for the Wichita Employees Retirement System and the Police and Fire Retirement System will drop at least a percentage point in 2015, beneficiaries of improved investment performance, City Manager Robert Layton said Monday.
As a result, the city will save almost $1.4 million – $1.2 million from the general fund, approximately $130,000 from the water and sewer utility and $45,000 from the airport fund, Layton said.
“The investment returns were better in 2013, so we’re able to offset the losses incurred in 2008 while improving the unfunded liabilities in both funds and reducing contributions,” Layton said.
“I think businesses all found that 2008 hit them pretty hard,” Vice Mayor Pete Meitzner said. “It’s good to see the investment returns bouncing back.”
As a result, the city contribution rate to the city retirement system will drop from 13.2 percent to 12.2 percent this year. That’s still higher than the 10.2 percent rate in 2009 or the 10.6 percent rate in 2010 – before recession-fueled investment losses began to take their toll.
The employer contribution rate to the police and fire plan will drop to 21.3 percent, down from 22.4 percent in 2012. That’s the lowest contribution rate since the recession, city officials said.
As a result, the unfunded liabilities in both plans will drop into the single digits – 6.9 percent for the city employees plan and 7.5 percent for the police and fire plan.
The city still is considering moving new employees away from the two defined benefit plans, which have drawn criticism from local conservatives who say they exceed the benefits of the defined contribution plans popular in the private sector.
“We’re not resting on these numbers, though,” Layton said. “We’re going to continue to look at pension alternatives for the systems, including defined contributions as an alternative for new employees.”
Meitzner said Monday he still supports that study.
Layton said some cities have found that portable defined contribution plans – retirement plans that employees can take with them when they leave public service – have been effective in attracting and retaining workers.
“At a time when you see the state’s pension system really struggling, it’s nice to see that we’re maintaining two healthy retirement systems,” the city manager said. “We still have a lot of work to do.”