Cincinnati city leaders announced a settlement has been reached in the pension system. (FOX19 NOW/file)
City workers who depend on the pension for their retirement gathered at a meeting earlier this year at Cincinnati City Hall. (FOX19 NOW/file)
Cincinnati Mayor John Cranley led the effort to reach the settlement. (FOX19 NOW/file)
CINCINNATI, OH (FOX19) -
City leaders announced late Tuesday they reached a "historic" pension settlement that will ensure benefits for current and future retirees as well as shore up the city's financial position for years to come.
Recent estimates had put the unfunded pension liability at about $862 million.
The settlement ensures the pension system will be 100% funded to meet all future liabilities and comes after nearly 10 months of negotiations with retirees and various unions representing employees like police officers and firefighters.
“I want to thank all of the parties for coming to the table and hammering out a compromise,” said Mayor John Cranley. “It's been a rough road and no party got everything they wanted. This settlement requires some sacrifice on all sides, but it will help strengthen the city's financial health and ensures the pension system will still be there for everyone in it.”
Cranley led an effort to bring the parties together to agree on jointly negotiating a settlement to resolve various lawsuits under the oversight of U.S. District Court Judge Michael Barrett. Cincinnati City Council unanimously agreed to the framework in March.
The terms of the agreement include:
• $200 million in retiree health care savings
• Cost Of Living Adjustment (COLA) for both current retirees and active employees will go to 3% simple interest, instead of compound
• Current employees and retirees will take a 3-year COLA holiday
• The city will make a larger contribution to the pension annually for the next 30 years.
All parties still have to sign the agreement and submit it to the District Court.
Cincinnati's pension system is funded by investment income, along with contributions by employees and municipal government.
Funding problems for the pension system stem from multiple causes including poor returns on investments due to the stock market crash in 2007-2008, and rising health care costs, city officials said.