The unions representing Atlanta's firefighters and police officers are suing the city over pension reform measures approved two years ago.
The unions, in a suit filed in Fulton County Court, contend the changes to the pension system, which was facing $1.5 billion in future unfunded liabilities, would cost plan participants "over 50 percent more to purchase the same amount of retirement benefits to which they already were entitled."
Public pensions across the country have come under increasing pressure as new methods of calculating liabilities have widened the gap between current assets and future needs. In many places, payments to pension plans have eaten into budgets. In Atlanta's case, they consumed 20 percent of the city's budget. The reform plan was designed to save more than 500 million over 30 years.
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Pushed by Mayor Kasim Reed in the summer of 2011, Atlanta's pension reform won unanimous approval of the city council. To keep their current benefits, employees were required to contribute an extra 5 percent of their salaries to the pension plan. Newly-hired police officers and firefighters would be eligible for a hybrid retirement plan consisting of defined benefits and 401(k) components.
All employees would participate in a 401(k) plan that would mandate they contribute 3.75 percent of their salaries with a 100 percent match by the city. In addition, the retirement age was raised from 60 to 62.
The Atlanta unions' lawsuit is similar to others filed by unions in Detroit, California and other locales. In general, unions contend changes to pension benefits and contributions breach their collective bargaining rights.
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