Some future employees of the city of Baltimore will not receive a traditional public pension under a plan approved by the City Council Monday.
Instead, new workers will have the option of choosing a 401(k) plan or a hybrid plan in which one third with will be a 401(k) and two-thirds will be a traditional pension, reports the Baltimore Sun.
Under the plan, new city employees will have to contribute five percent of their salaries to their retirement savings account.
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The legislation was approved after Baltimore unions and Mayor Stephanie Rawlings-Blake reached a compromise deal; the bill was stalled in a council committee for almost a year.
"This legislation shows that government and labor officials can sit down in good faith and work out a compromise that is fair to workers and protects the city's bottom line," Rawlings-Blake said in a statement.
"Rather than wait on a fiscal disaster, Baltimore is again being proactive in getting our finances in order for the long term by taking decisive action to significantly slow down the growth of our unfunded pension liabilities."
The pension system for city workers is only 68 percent funded and faces $686 million in liabilities, according to the paer.
The new plan is a step in the right direction, Councilwoman Helen Holton, chairwoman of the Budget and Appropriations Committee, told the newspaper.
"It shows compromise and compassion for a more balanced approach at addressing a reality of unfunded liability," she said.
Baltimore police and fire department employees as well as elected officials have their own pension funds.
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