Age to retire might go up
City looks at changes for new workers to fix pension fund
To bolster its largest, ailing pension fund, the City of Austin might require future employees to work longer than current employees must to retire and collect a pension.
City budget officials haven’t settled on a final plan but are recommending that all future workers, except for police and firefighters, be age 60 to 62 with 30 years of service or age 62 to 65 with five years of service before they can retire with full pension benefits. Currently, employees must be age 55 with 20 years of service, age 62 with five years of service or any age with 23 years of service.
Those generous formulas — along with a rocky stock market — have strained the city’s biggest pension fund and made it tough to retain longtime, highly skilled employees, city officials say. About 15 percent — 600 to 800 — of current retirees who were not police or firefighters were younger than 50 when they retired.
“Our current (pension) terms are much more generous than other local governments, and we can no longer afford them,” said City Council Member Bill Spelman, who sits on the pension fund’s board. The changes being weighed “will help cure the problem without shifting the (pension) terms too much for employees.”
The city also plans to add an extra $9 million to the pension fund each year for the next three years. Austinites will foot that bill; the money will come from fees that residents pay for utilities such as water and electricity and from property taxes, sales taxes and development fees that fund most city services, such as parks, libraries and police.
Below are eligibility rules for the pension systems in large Texas cities and the state. The ages and years of service listed are the minimums required.
We chose a hypothetical employee – age 60 with 30 years of service, retiring at a salary of $50,000 – and calculated the pension benefit using each system’s formula. There are other variables in each plan that might affect the comparison. Austin – current rules Age 55 with 20 years of service Age 62 with five years of service Any age with 23 years of service Annual pension for the hypothetical employee: $45,000 Employees can buy up to five years of service time to retire early. Austin – new rules recommended for future workers
Age 60 to 62 with 30 years of service
Age 62 to 65 with five years of service Annual pension for the hypothetical employee: $34,500 to $37,500 Employees could retire early, with reduced benefits. Dallas
Age 60 with any number of years of service Any age with 30 years of service Age plus years of service equals 78 (only workers who are at least age 50 are eligible for this) Annual pension for the hypothetical