Tag: Birmingham Pension
A proposed bill to revise the city of Birmingham’s pension plan gained the official support of the City Council Tuesday. HB510, which is pending in the Alabama Legislature, would compel the city to fully fund its pension obligation and increase employees’ contributions to the fund. Not doing so, Mayor Randall Woodfin argued, could spell future financial disaster for the city.
The city’s pension had been underfunded since 2002, and when Woodfin took office in 2017, the pension liability stood at $750 million. Since then, Woodfin has nearly doubled the city’s annual contribution to the pension. but its liability has continued to increase and as of 2019 stood at $900 million. It would still take the changes proposed in HB510 to put the pension fund “on solid ground,” Woodfin said.
As reported last week, HB510 would increase current employees’ contributions from 7% to 7.5% and would reduce retirement benefits for new employees hired after July 1, 2021. The bill would also reduce disability allowances for new employees and replace spousal survivors’ benefits with the option for an “actuarially reduced retirement benefit.”
Birmingham Mayor Randall Woodfin is supporting a bill in the Legislature that would both compel the city to fully fund its pension obligation and increase employee contributions to the pension fund by half a percent. The bill would be Woodfin’s latest step toward correcting the city’s longtime underfunding of the city’s pension plan, which he warned could cause a future financial crisis for the city.
HB510 is sponsored by Rep. Allen Treadaway, R-Morris, who was the Woodfin-appointed assistant chief of the Birmingham Police Department from 2018 until his retirement in October. Read more.