Commissioners make pension plan change

August 22, 2010
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Grand Rapids city commissioners amended the city’s pension ordinance for its non-unionized employees recently, a move that City Manager Greg Sundstrom said would reduce the city’s cost to the plan by 20 percent.

Administrative staff, managers and department directors will be given a choice from the following three options for their defined-benefit plan:

  • Keep the existing 2.7 percent pension multiplier by increasing their contribution rate to 10.2 percent.

  • Reduce the multiplier to 2.5 percent by increasing their contribution to 8.95 percent.

  • Reduce the multiplier to 2.2 percent by increasing their contribution to 7.28 percent.

The employees have until Sept. 3 to select an option. In addition, the new ordinance sets the multiplier at 2 percent for non-represented employees who join or rejoin the city on or after Sept. 5. Non-union employees account for roughly 5 percent of the city’s work force.

The city’s current contribution rate to the general pension, which doesn’t include police and fire personnel, is 13.6 percent. But it has been projected to rise to 27.5 percent in 2015, without changes being made to the funding provision.

“We value our employees and we want to be fair,” said Ruth Kelly, 2nd Ward commissioner. “But we have to provide services.”

Commissioners also gave the city’s pension board the authority last week to deduct the cost of health insurance premiums from retirees’ pension checks.

When commissioners adopted the current $110.7 million general operating budget in June, they said they needed more compensation concessions from all employees, including top-level, non-unionized managers and directors. They want all workers to increase their share of health insurance premiums, raise their contribution rate to the pension plans, and lower the paid time-off they receive.

Commissioners also gave Sundstrom and his staff until the end of the year to get the city’s dozen bargaining units to agree to compensation cuts of 10 percent, which would lower general-operating expenditures by $37.7 million over the next five fiscal years.

Five of the unions represent police and fire personnel. The city’s contribution to the police and firefighters pension is 11.6 percent but is expected to rise to 28 percent in 2015 without any adjustments.

“We’re serious about this,” said Mayor George Heartwell of pension changes.

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