The City Council unanimously approved legislation yesterday afternoon that will lead to a new defined benefit retirement plan for City employees. The plan is expected to save the City $200 million over the next 30 years.
This new retirement plan is a win-win-win. We've managed to retain a defined benefit pension system, which will help attract top talent to City agencies. Employees will contribute less from their salary, which means more money in their pockets now. And, over time, the City will save hundreds of millions of taxpayer dollars.
The retirement plan, called Seattle City Employees' Retirement System (SCERS) II, will be available for new employees hired on and after January 1, 2017. The new retirement system benefits better align with other public agencies in the Puget Sound region and were developed collaboratively with City labor unions.
Following the 2008 recession, the City’s retirement system faced financial challenges after experiencing a 26.8% loss. In 2011, a City Council-sponsored report defined the challenges facing the system and offered alternatives to ensure the future sustainability of the system.
The plan approved today is structured similarly to the current retirement plan, SCERS I, and will still provide an adequate retirement benefit to employees. Both employees and the City will contribute less to the program. Currently the City and its employees contribute 15.8% of payroll to fund the benefits earned during the year. In the new plan the contribution will drop to 11.9% of payroll.
We’re saving money, ensuring a healthy retirement system going forward, and providing competitive benefits for our employees. I'm grateful for the collaborative effort by the Mayor, Council and the City’s labor unions to reach this outcome.