RICHMOND, VA (WWBT) - A report on the health of Richmond's Retirement System suggests increasing the amount of money city employees contribute to their own retirement.
Currently, employees pay 1% to 1.5%, but the report suggests having them pay a little bit more.
The issue boils down to this: The retirement system took a hit when the economy slumped, and commissioners want officials to make sure sufficient funding is there to make good on retirement pension promises.
"Right now, the city of Richmond is lower than it wants to be," said Bob Blue, Chair of the Commission. "Most jurisdictions are lower than where they wanted to be because they had money invested in the stock market."
Richmond's retirement system currently has 58.6% of the money it anticipates it will need to pay retirees over time. Ideally, this type of fund would have at least 70% of that money.
Those who assessed the system say one idea to consider is to have employees contribute more to their own fund.
"One way to look at cost control is to have employees pay a higher percentage. In Richmond, one percent of their pay goes toward the pension obligation," he said.
For example, in Norfolk employees contribute 5%. So do Virginia Retirement System members. Overall though, Blue says Richmond's system has been managed very well.
"The return on assets, the way the money is invested, has been very successful. They take a conservative approach," said Blue. "What they need to do is get the funding status back up after the market event of 2008- there is a plan to do that."
Blue says one thing Richmond has done that not all localities have- is to continue to make it's contributions to the system- even through tough times. He says future projections look promising.
Another interesting suggestion- allowing senior employees to stay with the Virginia Retirement System versus joining the Richmond Retirement System.
"With Richmond being in the seat of government, there are employees at the senior level, the type that would report directly to the mayor, who the mayor might want to try to recruit," explained Blue. "From the state government and those are people who have been in the Virginia Retirement System."
Blue explained that if those recruits switch to the Richmond system, they in effect take a hit as compared to what they had in the Virginia System, starting over again in essence in a new retirement system. Another problem is the typical term length of those office positions.
"There is currently, in order to invest, you have to work for 5 years in the city and the Mayor's term is only 4," said Blue. "So hiring someone into the city at a level like that where the job could change in four years could be a recruitment disadvantage. It's not an expensive item and it doesn't affect a lot of employees, just something that might help the city recruit more talent."