A pension reform task force has suggested eliminating the 2% annual cost-of-living increases received by thousands of Milwaukee County retirees’ until 2036 to help strengthen the county’s struggling pension system.
The Milwaukee Journal-Sentinel reported that the proposal from the Retirement Sustainability Taskforce, which was launched by Milwaukee County Executive Chris Abele, comes as the county’s unfunded liability has grown to at least $550 million. It also said the portion of the payment designated for the unfunded liability alone has risen to $53.23 million in 2018 from $10.23 million in 2012.
The taskforce is made up of representative of employees, organized labor, retirees, the business community, elected leaders, taxpayers, and county officials. It includes the existing members of the internal county workgroup that started to review the option of joining the state pension. The goal of the taskforce is to study larger pension system modifications and develop recommendations to Milwaukee County on pension system modifications that should be considered.
The taskforce also suggested that future employees should be covered by the Wisconsin Retirement System instead of the county pension system, and recommended the county study the possibility of also moving recently hired employees who are not yet vested in the county pension system into the state pension system.
The taskforce will send the proposals to Abele and the Milwaukee County Board.
Moving future and recently hired employees to the state retirement plan would cost $10 million to $15 million, Teig Whaley-Smith, Milwaukee County’s administrative services director, told the Journal-Sentinel. He added that the expense could be offset by the $20 million in savings that would result from eliminating the 2% annual cost-of-living increases automatically given to retirees.
The county pension system’s growing liabilities have been attributed to lower-than-expected returns from pension fund investments. As a result, the county will lower its projected rate of return on investments to 7.75% in 2019, and might lower it even further, according to the Journal-Sentinel.
Tags: Milwaukee County, Pension, Retirement Sustainability Taskforce