Pension Reform: Contact Your Council Member

Pension Reform

Defined Contribution

A Fair System for All

{Pension}\ pen(t)-shen\: n.

1. A fixed sum to be paid regularly to a

person or their dependents, typically

following retirement from service.

2. If fully funded, pension costs would be the

third largest line item on the City of Memphis’

budget.

{Unfunded Pension Liabilities}/ ə̩nˌfəndid/ /pen(t)-shen/ / l̩īəˌbilətē/ : n.

1. Potential or actual debts for which no

current

funding is available.

2. Our current retirement has more liabilities

than assets. The money needed to cover

current and future retirements is not

available.

We have a problem.

By no fault of city employees, our

government put the Cadillac of

retirement systems in 1948.

Today, Memphis owes $709

million in pension debt.

We cannot afford this system

and

haven't been able to for years.

If we can’t afford it now, we can’t afford it

later.

In 2014, it cost $96 million to

fully fund our pension system.

The city only paid $20

million, creating a payment due

of $76 million.

In 15 years, it will cost taxpayers

$252 million to fully fund our

pension system. That’s the same

that we spend now on law

enforcement.

If we don't fix this, everyone

loses.

Pension debt is consuming our budget and

increasing our taxes. This means less money

for:

Public Safety

Libraries

Parks

Anti-Blight Services

Roads

Memphis owes $709 million in pension debt.

To pay this debt, each household owes an additional $2,900 in

taxes.

Polls taken by the City of Memphis show:

65% of Memphians said they would definitely

or somewhat support changes to pension

plans held by current City employees in order

to contain future pension costs.

We need a fair solution.

Defined Contribution is a fair

and equitable solution for

everyone.Comparable to a 401(k), Defined Contribution

is more flexible and does not penalize short-

term employment.

Benefits of Defined Contribution

1. Defined Contribution is the only plan that does

not allow the government to “kick the can” down

the road and defer pension payments.

2. Defined Contribution will ensure our retirees'

money is available when they need it.

3. Defined Contribution will allow us to be

competitive when seeking to attract or retain

businesses because it reassures everyone that

our city is on solid financial ground.

Advantages to Employees

• 33% increase in city contributions—the city will

contribute 8% of each employees’ annual salary to the

new plan.

• Contributions become portable and the employee

owns his or her account in full.• Under the current plan, if the employee leaves before serving 10

years, they loose the benefits they accrued and the money they

paid into the pension plan.

• Employees are automatically vested at six months.

• The ending balance can be taken as a lump sum or

annuity.

Advantages to Taxpayers

• There’s no unfunded liability—this is a pay as

you go plan.

• Defined Contribution will restore

predictability and sustainability to city

finances.

• Our children and grandchildren are not

saddled with ever-growing debt.

• Defined Contribution requires elected

leaders to make retirement payments on

time—just as they do with paychecks.

Sound the Alarm!Support a fair solution for everyone.

Support Defined Contribution.

.1. Pick up the phone.

2. Call your council person at (901) 636-6786.

3. Leave a message with your name and

address and let them know you SUPPORT

Defined Contribution

Follow these steps to make pension

reform happen in Memphis NOW.