Denver’s City Council will make its final vote tonight on changing the retirement formula for new employees — a move that city officials say could save up to $8.5 million annually decades from now.
At the crux of the change is discontinuing the “Rule of 75” in place for current city employees in favor of the “Rule of 85” for new workers — meaning to receive a full pension, city employees would have to retire after age 60 with at least 25 years of experience.
Current employees now must be at least 55 years old with 20 years experience to receive a full pension.
“This reflects the economic reality today,” said Councilman Charlie Brown. ” This is a fiscal issue.”
Last week, the council wrestled over the change, with some council members arguing to change it to a “Rule of 80.” That amendment failed in a 6-4 vote.
Ultimately, the amended bill passed with a 9-1 vote with Council President Chris Nevitt casting the lone “no” vote.
“It goes too far in the direction of providing a pension plan that is less than what our employees deserve,” Nevitt said. “We are talking about very long-term bets. The savings won’t be realized until the people we hire next month retire. The margins here are very small.”
Mayor-elect Michael Hancock voted in favor of changing the retirement system and said at the meeting that the change to the retirement system is the prudent and conservative step to take.
“People are living longer. Our plan must support them longer,” he said. “This is for new hires, folks who are coming in. Current employees won’t be impacted. This is a vote on soundness and conservatism.”
Hancock’s efforts to get other council members to support the change helped break a stalemate and get the bill to the floor.
The city estimates that once the entire workforce is covered by the new plan, it will save $8.5 million annually in 2011 dollars.
Even though Nevitt disagreed with Hancock, he singled out the mayor-elect for “getting us to a final resolution.”
Ed Bagwell, a business agent with Teamsters Local 17, which represents more than 1,000 city employees, said he is frustrated with the expected change.
“Now there are four tiers of pension plans in the city,” he said. “They have basically shut the valve off for people who want to work for the city. It has diluted the strength of one of the benefits to being a municipal employee. . . . Now you have to wait until you are practically senile to get your pension.”
Jeremy P. Meyer: 303-954-1367 or jpmeyer@denverpost.com
