Long council hearing on Cincinnati pension system
Cincinnati council members spent nearly four hours Tuesday questioning the fund managers and the actuary for the city's pension system.
Some are worried about the fees those managers are charging in relationship to the city's returns on its investments. Council also wants to make sure those managers are making smart decisions based on current market conditions.
“There has to be a real clear justification of why we're paying that if the returns don't match,” said Council Member Christopher Smitherman. “So what I'm always having that conversation is what are we paying for and specifically what are we paying for to get what return.”
The discussion comes as the city gets ready to finalize a federal consent decree to stabilize the pension system. All the parties involved--the city, current and retired workers--announced a memorandum of understanding in late December.
“So it's sort of like the foundation of a building, the devils in the details,” said retirement system executive director Paula Tilsley. “So as we are working on finalizing what we will call the consent decree, which has all the details on how we will implement this, that's what's going on. We are nearing the end.”
Assistant City Manager Bill Moller has plenty of experience with the retirement issue. He said the city's done several things to make sure the fund improves.
“In the recent past changed our assumed rate of return, much more conservative,” Moeller said. “There are changes to benefits and the city will be required to make that contribution via a consent decree and if the city doesn't then has to answer to a federal judge.”
Right now the retirement system still has a large future unfunded liability. But the recent agreement sets up a framework to make sure it is 100 percent funded in 30 years.
Once the consent decree is done it will be presented to all the parties. After that federal judge Michael Barrett will hold a fairness hearing and decide if the proposal should be approved. That process could take another two to three months.