As the first in a pledged series of efforts to tackle the city’s pension obligations, Mayor Toni Harp and municipal union stewards gathered Wednesday to announce $700,000 in annual savings that will help pay down the unfunded portions of the pension funds.
The city’s pension fund for police and fire is currently about 52 percent funded, while the fund for all other municipal employees is roughly 42 percent funded. If all of its employees retired today, the city would be hundreds of millions of dollars short of being able to pay for their retirement.
The new savings come from an expected reduction in fees on investments. The city learned that it is currently over-paying for investment services from Northern Trust and plans to contract out this function to Morgan Stanley instead. Over the course of 10 years, Harp said, the shift could save the city $11.2 million.
City Controller Daryl Jones said the administration is in the initial stages of a long-term process of collaboration with the pension boards and the unions to devise strategies to pay down the unfunded liability while preserving the city’s fiscal health. Meetings will take place on a quarterly basis, and Jones estimated that the group could have a comprehensive plan within six months or a year.
“We’re going to strengthen our pensions. That’s our mission,” Jones said.