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Cincinnati Nears Deal on Nearly $1 Billion Pension Shortfall

It may not be largest city in Ohio or even on the Ohio River, but Cincinnati can lay claim to something enormous — its unfunded pension liability, which amounts to more than $860 million. A deal to address it is close to being struck, but that could be months away.

According to WCPO, the fund, which has assets of just over $2 billion, did grow last year. But the 6% growth in 2014 was below the 7.5% rate the pension fund’s investment board had set. Efficient Gov reports that the pension system, which has more than 4,000 members, is 63% funded.

Judge Michael Barrett of the U.S. District Court for the Southern District of Ohio presided over the negotiations between the city and local labor unions that led to the agreement, says Efficient Gov. The agreement calls for:

1. shifting city workers to defined contribution plans;
2. transferring $200 million in retiree health care savings to the pension fund;
3. suspending cost-of-living increases for three years;
4. calculating cost-of-living increases with simple interest instead of compound interest; and
5. a contribution of 16.25% of payroll by Cincinnati over the next 30 years.

 

Cincinnati Retirement System Executive Director Paula Tisley on Feb. 17 said Barrett will not sign a consent decree concerning the agreement until pension plan participants have been able to comment on the agreement at a series of meetings, WCPO reports.