BREC targets pension overhaul
The parks system is making big moves, reducing expenses to invest in recreation
One item on BREC’s agenda today could reshape how the park system hires workers, handles benefits and spends money on recreation.
Why it matters: The commission wants to hire a retirement financial analyst at its 5 p.m. meeting today to conduct an actuarial review of its defined benefit plan, CPERS, and evaluate whether another option would make more sense.
That is a sign BREC may be preparing for a major shift under its new commission: moving future workers to a 401(k)-style plan, the standard in private business.
What they’re saying: “It’s a fiscally responsible thing to do,” BREC Chair Mike Polito tells RedEye. “Under the defined benefit plan, we are spending 30 cents to 40 cents on a dollar of salary for retirement. That is outrageous spending.”
The numbers: The system’s unaccrued liability shortfall for retirment is north of $100 million and likely much more. Polito argues that if BREC moved to a 401(k)-type plan, it could pay down that obligation within a few years and then put more money into recreation.
What’s next: The firm BREC hires will recommend alternatives to CPERS, the city-parish retirement system. Unfunded pension liabilities have also become a major issue for city-parish government.
Polito’s take: “To be blunt, we don’t want people who will work 20 years and retire. We want people who want a higher salary now and want to make a difference, and give them an opportunity to place their money in an investment plan they can control.”
That means a 401(k)-style system.
Meanwhile, case for defined benefit plans: Supporters say defined benefit plans help public agencies attract and keep experienced workers by rewarding long-term service and offering retirement security. They also protect employees from market swings and bad investment decisions in ways a 401(k) cannot.
Bottom line: BREC has been moving quickly and aggressively under interim CEO Janet Simmons, with Polito leading the commission. He says he wants both a report and a new retirement plan in place within six months. Earlier this year, BREC announced it was cutting about 10% of its workforce to boost salaries and invest more in parks.
