A Nebraska economic research group disagrees with the city of Omaha’s projection that the police and fire pension system could be solvent in 20 years.
On Wednesday, a new report from Cavanaugh Macdonald Consulting was released showing the pension system will be fully funded and solvent in about 22 years. The unfunded liability in the police and fire pension system is projected to be $620 million.
But research by the Platte Institute says the unfunded liability is more like $1.1 billion, and the solvency projection is based on assumptions. Platte Institute executive director Jim Vokal says the city needs to move to a different type of pension system.
"We need to cap those existing employees within the Defined Benefit system and move new employees into a Defined Contribution system, which is more like a 401k, where the payouts are quantifiable, but more importantly they are based on actual contributions and investment returns, actual returns in to the system."
Vokal says the city can’t guarantee the pension system will be solvent in 22 years, and the projected 8 percent return on investment is unrealistic. He says without a change to the police and fire pension system, more taxpayer money will go toward pension contributions---leaving less for city services.
KIOS reached out to the Open Sky Policy Institute for this story. The organization does not do research on pensions.