El Paso to tackle pension deficit
US - The city of El Paso has agreed to contribute US$210m to help fund the $350m shortfall in the Firemen and Policemen Pension Fund.
The fund itself has proposed changes to its pension payouts. After years of discussions and negotiations, the city and the fund board of trustees came to an agreement to reduce the pension fund deficit.
The decision cames after it emerged the shortfall would almost double in 10 years and reach $1.4bn in 20 years if nothing was done..
The city agreed to contribute $100m on 1 July this year. This will be followed by a further $110m contribution to be made two years later.
In addition, the present 18.5% cap on city contributions will be removed and replaced by amendments with a more equitable and secure funding formula.
Since these amounts did not cover the whole of the deficit, the fund made proposals to change the pension conversion formula and contribution rates for current members.
It also suggested accrual rates, retirement eligibility and survivor benefit amendments for future members.
The pension fund board will be recommending these changes to the members for approval.
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