State forcing Memphis to fully fund pension

memphis skyline

MEMPHIS, Tenn. — As of July 1, the State of Tennessee requires local governments to contribute 100% of the cost, determined by outside agencies, needed to keep their pension funded.

One city council member said it could cost up to $120 million per year to fully fund the pension.

Governments have six years to get to that 100% funding mark.

Unlike Memphis, some governments are members of the Tennessee Consolidated Retirement System, which has long required 100% pension funding.

The Segal Company, a human resources consulting firm, found the city pension is underfunded by $467 million.

That contradicts a report commissioned by the firefighters union which put the number at $301 million and a report done by PricewaterhouseCoopers which put it at $682 million.

The new law spurred Mayor A C Wharton and city council members to search for extra money to pay into the pension.

 

14 comments

  • Allahu Akbar

    That is why it should be a 401(k) or (a). Not even big business has pensions anymore and that’s exactly what government is “Big Business”. Here is goes the state of TN getting in Memphis business as usual. We should branch away and be like Chechnya or Kosovo.

    • langor1

      Uh huh, because those are 2 places to emulate. And a 401A is just an opportunity for government fat cats to get fatter since it doesn’t require parity among workers, allowing for structuring based on self created classes.

    • Get Informed

      not true. I met a pension attorney not long ago. He only does pensions for the private sector. He says they work great because they are run efficiently. He laughed and said ” With the laws governing private sector pensions, if I ran it like the city pension has been run, i would be in jail.” There are strict federal laws on private pensions that govern employee contributions. Unfortunately until this state law that has not been the case with public pensions. Employees at the city pay more into the pension than the city does. Roughly 8% for employees and 6.2% for the city. The city, as a result does not have to pay 7.5% social security, which means the employees will not get social security. The city has shorted their contributions for years. Even the council acknowledges this. Even so the pension is 83% funded per Segal, the council hired actuary. Typically 80% is considered strong by national standards. To hear him tell it most pensions are never 100% funded. They use the example of having a mortgage. Most people make the payments but dont have enough money in their bank account to pay.it.off. That is how they are typically run. This is not like some northern pensions whereas no employee put money in it and they retire with 100% of salary. The employees put far more in than most do on a 401k and they get 62.5% of a base salary at 25 years. i met an retiree recently who was a civilian employee making 1500 a month. Now she will have to pay 1600 for insurance and has no social security. I think she said she was 61 or maybe 62. She is now negative 100 dollars a month to have insurance and will lose everything. But I don’t think anybody cares. I say that. I do. It breaks my heart to see that. I understand her frustration sadness and maybe even rage at this city government. They used her up and filled her with promises and abandoned her in her time of need. She wants no charity. Just what she was owed for over 25 years of work. Who should be penalized? Her? She made her payments to the pension. They are payroll deducted. The mayor said it shouldnt be the tax payers. But logically, as much as I hate to say it, who put the people who didnt make the payments in office? My point is, she is the least to blame and to bankrupt her before you cost every citizen, non citizen, tourist and passer through 25 cents a day in sales tax if they spend 50 bucks on something that day……well that is just not right.

      • Robert Zachar, former Memphis Fire Fighter

        Everyone involved in the decisions made by the City of Memphis to NOT contribute their FULL share into the Employees’ Pension Fund EVERY YEAR should be indicted and charged with grand larceny. Additionally, who ever is/was responsible to oversee the funding (both State and Federal level) should be charged with Conspiracy to Defraud. Surely these people knew what they were doing was wrong and deserved to be held accountable. THEY should be the ones held liable to replace those funds; NOT THE PEOPLE THEY STOLE IT FROM!!! HOW can this disgraceful activity NOT BE CRIMINAL. “Welcome to Memphis, 2nd most dangerous city in America, but we’re trying harder to be #1″!! Heck, City employees are not even safe from their elected politicians. “Memphis, the city where highway robbery is legal”!!

    • therealmpd

      Sounds great just have the taxpayers back pay the social security these retirees never paid and we can call it even… oh, would that be ridiculous? So is telling an elderly person the benefits promised before most of us were born that we are no longer honoring them. Drop your greedy mindsets and have compassion.

  • Jakrabt

    Detroit began it’s decline into bankruptcy with pension problems. This all smells suspiciously familiar and it stinks to high Heaven. I do hope MPD, MFD and the other pensioners stick to their guns and demand what is right according to their contracts. When government starts getting too generous with big business and playing fast and loose with people’s tax dollars this is bound to happen. A.C., you need to fix this problem WITHOUT taking those people’s money they already planned their retirements around!!!

    • 1midtownmike

      AC needs to get into a damage control frame of mind…..swallow your pride and politely ask the state of Tennessee to come in and take over. Surrender your empowerment like Memphis City Schools did. Forget racial solidarity and do what’s best for what’s left of a tax base…..black or white.

    • therealmpd

      Detroit dug it’s hole by first making tax breaks to auto makers so they wouldn’t leave and take jobs with them. Similarly we give massive tax breaks in the form of PILOTS.

  • Scooby Doo

    That is the bottom line. The city government. DID WRONG AND STOLE FROM THE EMPLOYEES BY NOT PUTTING IN THEIR PART OF THE PENSION. They spent the money on pet projects to funnel money to their buddies. Now their answer is to steal the pensions of the employees by charging them insane rates for their healthcare. This is after the employees paid into the system for 25-30 years to have their benefits. This is criminal. The media keeps focusing on a few dept heads with large pensions but the average employee pension will be wiped out by the new healthcare rates meaning the employees worked and contributed for decades only to receive nothing while the crooks in city hall stole every dime the city had. The budget has to be straightened out but not by the employees getting cheated again. There have been no cuts at the top. None! I thought AC was a democrat for the little guy and justice. Guess he is just another thief out for himself and his high roller buddies in the chamber of commerce who were mostly born to privilege. Now they want to cheat cops, firemen, janitors, garbage men , and secretaries who have scuffled all their lives working for low pay but the assurance of benefits. Now they get low pay and no benefits. I hope God in heaven strikes these thieving snakes who prey on the old, the weak, the helpless. I am sure he will deliver his judgement on them because the bible is clear about what happens to people who do those things. You councilmen and mayor better fall on your knees and beg for forgiveness and right your wrongs before God gives up on you and sends his judgement into your lives and your families lives

    • Scooby Doo

      God touch the hearts of the councilmen and the mayor. Convict them of their sins of theft and turn their hearts to your ways gracious and fair God who can do no wrong. Place your spirit in them and free them from their evil ways. We know you hear the cries of the oppressed Lord who only asked for the wages they worked for. Heal our city and turn the hearts and minds of AC Wharton and the council to your ways instead of the evil ways of this fallen world. We pray for fairness in a corrupt world Lord. Justice in this unjust world. Hear our prayers Lord and deliver us from the schemes of wicked men.

      • Don

        Maybe AC might say a prayer when he hears the bars slam behind him at the pokey.
        But who will he pray to? He thinks he is God.
        At any rate I’d like to be there so I can grin and say I told him so.

  • Don

    One city said it could cost up to $120 million per year to fully fund the pension.
    Well council member, how about the council start bringing their lunches instead of having your lunches catered at the taxpayers expense.
    This is a good start to saving money for what it should go far.

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