Denver City Council president Chris Nevitt says “you need a good reason to (mess) with the pension” for municipal workers and that he is a “little skeptical” of changes proposed by Mayor Guillermo “Bill” Vidal.
Here’s a good reason: fairness.
Denver residents who support the city retirement system through their taxes generally qualify for a pension in their mid-60s. City employees, meanwhile, qualify for their public pension at age 55 if they have worked at least 20 years.
Vidal — like former Mayor John Hickenlooper before him — would like to hike the minimum retirement age for future hires to 60 and require at least 25 years of service to qualify. If this is intolerable, then what are we to make of the growing bipartisan chorus for boosting the Social Security retirement age to 68?
Are only callous brutes in favor of that adjustment?
How can council members justify increasing the amount that taxpayers contribute to the Denver retirement system — which does not include police and firefighters — while preserving such a wide disparity in retirement ages?
In the same letter to the City Council seeking support for a modestly higher retirement age, Vidal also asks the council to boost the contribution rate from 15 percent to 16.5 percent of salaries, with half of the increase supplied by the city through general revenues. This request is understandable, but it will of course put yet more pressure on the overall budget, which city officials repeatedly tell us suffers from a long-term structural imbalance.
In other words, revenues have been growing more slowly than outlays for some years — and the trend isn’t merely an artifact of recession. And yet some council members still consider retirement at 55 an unassailable right — even for workers who aren’t yet on the payroll and who wouldn’t retire until at least until the 2030s.
It isn’t just taxpayers who aren’t employed by the city who could benefit from the mayor’s proposed reform. As Vidal emphasized, “These changes will generate long-term savings” that “could be used to lower the level of future contributions . . . by all employees and the city” or to “provide future cost-of-living increases to the base retirement benefit.”
You see, unlike many public pensions, the Denver Employees Retirement Plan, or DERP, has benefited from solid management that has refused to give cost-of-living increases in recent years to limit its long-term liability.
The prospect of early retirement is hardly the only lure for city applicants. Salaries and benefits might not compare with increasingly outsized federal employee packages, but they do stack up with private compensation, as a 2009 study confirmed.
In fact, that study clearly understated the generosity of city compensation by comparing it with a skewed sample of employers that included only a few giant private companies as well as other cities and counties. Then, incredibly, the study failed to include time off in measuring benefits as percentage of payroll.
Nevitt is certainly correct that the Denver retirement plan is “one of the most solvent and successful pensions in the country” and has been working hard to “assure our long-term solvency.” Yet the simple truth is that being 85.04 percent funded (as of Jan. 1) is not the same as being fully funded, and that both employees and taxpayers (and rising markets) have helped dig the pension out of its recent hole. If investments go south again, the city will be asked to do more.
Politicians invoke fairness regularly when increasing public benefits to various groups. Yet they need to appreciate that the concept cuts both ways and that taxpayers in private employment expect to be treated fairly by their municipal leaders, too.
E-mail Vincent Carroll at vcarroll@denverpost.com. Read his blog at .
