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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.