Fairfax City is considering altering its pension plan, which may be the most generous in the Washington area, because of fears that budgetary shortfalls may make it impossible to fund the program in years to come.
The plan, under which some of the city's 270 employes and 51 retirees could conceivably end up receiving more money in retirement than they earned while on the job, may have as much as $3 million in unfunded liabilities, according to one calculation.
Concern over the pension plan is enough to warrant a study, said Mayor John Russell last week. "Some say we're behind in payments and some say we're not. We're looking at it," he said.
According to City Comptroller Edward J. Cawley, the pension fund appears to be about as well funded as most other local pension funds. Those funds, according to one recent study, have assets to cover 40 to 75 percent of the liabilities they have accrued.
When combined with Social Security and benefits from a state pension plan, Fairfax City's pension plan provides combined retirement pay ranging from 82 to 99 percent of an employe's working salary, according to city finance officials.
Retired employes also receive increases every two years that amount to whatever the increase was in the cost of living. That can boost pension pay above the highest salary levels they reached while working, Cawley confirmed.
He said, however, that although the dollar amount of a pension, which is based on an average of an employe's final three salary years, might be higher, "its purchasing power would not be greater."
Fairfax City also has one of the earliest retirement ages. Employes may retire at age 60, and police and fire employes may retire after 20 years on the job.
Most other area jurisdictions require public employes to work until age 62 or 65. Policemen and firemen are permitted to retire after 20 years of service in most jurisdictions, but usually only after reaching age 55.
Fairfax City's retirement committee, composed largely of city employes, is studying pension provisions and will recommend changes to the City Council in the next few months, said Cawley, a member of the committee.
Mayor Russell said that the council also may hire an outside consultant to review the entire city pension system. The council last week voted to spend $5,000 for a consultant to study disability provisions and other minor aspects of the pension program.
"I was aware our benefits were higher than most local jurisdictions' and our retirement age lower," Russell said.
If changes are made, as they were recently in Arlington County's pension system, present employes would be "grandfathered" and entitled to the pensions promised them, Russell said.
"We've got to try to get a balance" between benefits for employes and costs to city taxpayers, he said. "But we've got to be sure of fairness. We're going to have to take a good hard look at the overall" pension plan, he said.
The pension system was mentioned by former council member William T. Scott Jr. at last week's council meeting, as the council was beginning to wrestle with an estimated $2.2 million shortfall in city revenues.
Scott charged that the city pension fund had as much as $3 million in unfunded liabilities, which he blamed on the tax-cutting votes of previous councils.
Most towns and small cities in Northern Virginia have their employes enrolled in the Virginia Supplemental Retirement Service, to which both employes and municipal employers contribute, as they do to Social Security.
Several communities, such as Fairfax City, provide additional pension benefits, some only to police and fire employes and some to all public employes.
In Arlington, employes hired before 1981 received maximum pension benefits of 70 percent of salary when they retired at age 60, but that year the county reduced the benefits to a maximum 45 percent of salary and increased the retirement age to 62, according to county retirement administrator Irwin Mazin.
However, Arlington at the same time increased some retirement benefits by providing cost-of-living payments for all pensions--a maximum 7.5 percent if inflation exceeds 12.5 percent.