Montgomery retirement overhaul up against the clock in Legislatu - WSFA.com Montgomery Alabama news.

Montgomery retirement overhaul up against the clock in Legislature

Posted: Updated:
MONTGOMERY, AL (WSFA) -

A plan that could save Montgomery taxpayers money now has only one day left to pass the legislature. Officials seek to lower costs for the city's retirement program.

"It's not a situation that tomorrow we're going to be in any danger, but as we go two years, five years, ten years downstream if we don't make these modifications for the future, our pension fund is going to be substantially underfunded," said Mayor Todd Strange.

The proposed legislation would change the city's plan for new employees from what's called a defined benefit plan, basically a pension, to a defined contribution plan. It would only apply to new employees hired after October 1, 2013. It also makes changes to when some employees would be able to collect on their retirement.

"Under the new plan, you have an individual plan where you can contribute as much as you want," said City Finance Director Lloyd Faulkner. "It's kind of like a match but not exactly. You could even draw a lump sum."

Faulkner says retirement costs are eating up a bigger chunk of the city's payroll expenditures, more than $10 million this fiscal year alone.

"It's really a strain already," Faulkner said."It's getting to where it could be not affordable."

The mayor told WSFA 12 News if the legislation doesn't pass on Monday, city employees could see an immediate change to their paychecks.

"An immediate two percent increase in their contributions to their retirement account. Today, they do six percent, we have the authority to go up to eight percent."

Montgomery-area lawmakers expect a vote will be taken on the bill, but could not guarantee it.

Copyright 2013 WSFA 12 News.  All rights reserved.

Powered by WorldNow