By GABRIEL GOODWIN
Sunday Times Newspapers
ALLEN PARK — The city did not pay part of its contribution to the pension fund at the end of its fiscal year and repayment discussions between the pension board and emergency manager continue.
In its report to the board, Gabriel Roeder Smith and Co., which handles the city’s pension fund, estimated the city owed $2.5 million to the fund and calculated higher future pension contributions. The estimates did not include changes to fire and police wage changes or changes in their multipliers.
“Because of the difference in the fiscal year and the calender year, the company estimated there was a $2.5 million deficit in the pension,” Emergency Manager Joyce Parker said. “But the city did make its first payment to the pension in December, but because of the deficit, we couldn’t make a lump sum payment in June.”
The missed payment is about $1.25 million and was half the amount the city was required to pay into the plan. Parker said she requested the board to allow a payment plan to repay that money over an agreed period of time. Currently, the pension is funded at 70.1 percent, or $72.6 million. This is an increase over the previous year.
The board authorized Gabriel Roeder Smith and Co. to research restructuring options to the general employees’ portion of the pension. In the company’s latest report, there was about $23 million in the fund in the closed plan. That money, the company said, would not sustain the pension in the long term and will have its findings available to the board by its next meeting in September.
A closed pension plan doesn’t allow new hires to join into the plan and as people retire, the remaining employees are required to fund the account. Parker said the goal is to find the best approach to the pension fund because the money won’t last forever.
The board members said the original decision to close the plan was made during a very different economic climate and was a very short-sighted decision.
“It currently is not the most cost-effective way to fund the general pension for the city or its employees,” Parker said. “We are looking for the most cost-effective solution for both the city and its employees. The city and board are looking to extend the funding plan beyond the 10 years left and to reopen the plan.”
(Gabriel Goodwin can be reached at [email protected])