Mt. Vernon Register-News

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February 25, 2014

Council discusses pension issue

MT. VERNON — The city council discussed the unfunded pension liabilities in the Police and Firefighters Pension funds, agreeing reform must come from Springfield to fix the problems.

“We have very little control of these pensions at the local level,” said City Manager Ron Neibert. “What we can do is to first make sure we have good, diligent people on the boards who are fairly applying the laws, and two, we need to make sure they are making the best investments possible.”

Neibert and City Finance Director Merle Hollmann told the council about state legislation that affected the average age of pensioners — with younger pensioners leading to more years of collecting a pension — and the percentage of pension surviving spouses now receive.

“We’re not discussing whether these laws are good or bad, we’re just looking at the math,” said Councilman David Wood, acting as Mayor Pro Tem due to the absence of Mayor Mary Jane Chesley. “This is not about whether we believe the legislation is right, we just need to look at the numbers so we can plan accordingly.”

According to information from the city, the average age of retirement pensioners is 52 on the two pension plans; the average age of those on the disability pension is at 45 years.

The second change which affects the two pensions — not those employees on the Illinois Municipal Retirement Fund — is the surviving spouse benefits.

“Before the law changed, surviving spouses received 50 percent of the pension amount,” Neibert explained. “But in 2004, when the statute was passed, affecting the firefighter pension fund, the surviving spouses get 100 percent of the pension plus a cost of living increase every year. The law was already in effect for the police pension fund.”

Since 2012, the city has funded 100 percent of its annual obligation to the fund, and funds at a 22 year amortization level, even though it is authorized to use a 30 year amortization period.

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