AnnArbor.com | 7 retired Ann Arbor city employees collecting pensions above $100K a year
A new report released by Taxpayers United of America claims many retired Ann Arbor city government employees are receiving lavish taxpayer-funded pensions.
The group released a list of the city’s Top 50 pensioners this week. All of them make above $68,000 a year in retirement and seven make above $100,000, according to the report.
At the top of the list is Thomas Schmid, the city’s former assistant fire chief, who retired in August 2002 after a stint as interim fire chief. He now receives a pension worth $126,224 a year, according to the report.
Second on the list is Bill Wheeler, a city engineer who retired in May 2010 but remained under contract through part of this year to oversee the Ann Arbor Municipal Center project. Wheeler now receives an annual pension of $121,861, according to the report.
City Administrator Steve Powerssaid he believes TUA is targeting high pension earners for political purposes, but the reality is that the average Ann Arbor benefit payment is $31,258 and city employees are contributing to their retirement benefits.
Powers said retirement benefits for city employees have been changed by City Council and employees several times.
He also said TUA’s report lists pensions earned before many of the changes were made, and most individuals on the list were hired and retired many years ago.
“Even in the last couple of years as collective bargaining agreements expired, there were significant and specific changes made to the pension ordinance,” Powers said. “The changes were made in response to difficult economic and budgetary conditions and to ensure the retirement benefit is financially sustainable.”
Total payouts for pensioners making above $100,000 could range from $3 million to $4 million in their lifetime, according to TUA’s analysis, which assumes the individual retires at 55 and then receives benefits for another 30 years with modest cost of living adjustments.
“While Ann Arbor stagnates with 8 percent unemployment, a median home value of $223,000 and an average annual wage of $52,000, retired Ann Arbor government employees are enjoying lavish, gold-plated pensions that have made some of them pension millionaires,” said Christina Tobin, vice president for the national taxpayers’ rights group.
Ending pensions for all new hires would eventually eliminate unfunded government pensions, Tobin said, recommending putting new hires into Social Security and 401k plans.
“If each current government employee were required to contribute 10 percent toward his or her pension, taxpayers would save billions of dollars,” she added. “We need to knock all politicians out of office who make deals with bad government union bosses and bad corporate power brokers at the expense of the taxpayers.”
The City Council recently approved pension ordinance changes that increase both the vesting period and final average compensation period used for calculating pensions of nonunion city employees hired after July 1, 2011.
Eventually, when all nonunion employees are under the revised plan provisions, an actuary estimates the city’s costs would be about $230,000 less per year.
Powers said it was an Arizona resident who sent a Freedom of Information Act request to the Ann Arbor Employees’ Retirement System recently, requesting names, salaries and pension, information presumably on behalf of TUA. The retirement system released the requested information of names, dates of retirement and amount of annual pension.
As of June 30, the city’s pension system was 88 percent funded, compared to being 90.3 percent funded the year before and 126.8 percent funded in 2002.
The city’s unfunded pension liability has grown to $57.6 million, up from $45.5 million a year ago — and significantly up from $1.7 million in 2008. City officials hope recent changes to retiree benefits will help the city chip away at that obligation.
A recent actuarial valuation report for the city’s retirement system showed the city had 798 retirees and 135 beneficiaries receiving benefits as of June 30. The average age of persons receiving benefits is 67.2 and the average annual benefit payments equal $31,258.
The number of retired members and beneficiaries increased by 6.1 percent in the past year, while the average age of the retired members remained the same. The total annual benefit payments for those members increased by 7.3 percent in the past year.
As of June 30, there also were 664 city employees in active service covered under the provisions of the city’s retirement plan.
On average, Powers said, 25 percent of the city’s total pension benefits now in “pay status” are attributable to individual contributions plus interest. For most employees, he added, their pension contributions have increased recently.
Powers also said the funded status of pensions is merely a snapshot in time and includes many variables. He said there are various estimates of funded levels of public plans, including one survey of 215 pension funds that found an average funding level of 76.1 percent.
Corporate funding levels of defined benefit plans are estimated to be about 75 percent, according to several sources, Powers said.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at firstname.lastname@example.org or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com’s e-mail newsletters.