PORTSMOUTH
Just before retired City Manager Luke McCoy turned 65, the city sent him a letter. His pension would be reduced as soon as his Social Security benefits kicked in, it said.
Retired public utilities dispatcher Peggy Preddy's letter didn't arrive until she turned 68. She watched her monthly net pension payment shrink from about $1,100 to $366. Because of the change, her annual income is now nearly $8,500 less than it used to be.
Roberta Riddick, a retired 29-year employee of the city's finance department, saw her monthly net pension payment decrease from about $1,240 to $690.
Also at issue are cost-of-living adjustments that the retirees say they received in the past but were eliminated when their Social Security reductions kicked in.
Led by McCoy, the former city employees and a group of other retirees want the City Council to eliminate the reductions for Social Security and reinstate the cost-of-living adjustments.
Betty Burrell, the city's chief financial officer, has said that the request could cost the city millions. She also said in a presentation to the council in July that the retirees acknowledged in writing that they knew their benefits would be reduced once they began receiving Social Security.
The retirees deny that they ever acknowledged the reduction and say they would like the city to produce proof. They have spoken to the council about the issue at meetings over the past few months.
As a result, the city has held a couple of forums on its retirement programs and the council recently appointed a committee to examine Portsmouth's supplemental retirement system and return with recommendations.
Vice Mayor Bill Moody Jr. said he's anxious to review the committee's findings. However, he said, he has already stated publicly that the retirees' cost-of-living adjustments should be reinstated.
The adjustment would mean a change to the city code, which states that an employee's retirement income is determined by applying a formula to their final compensation. It does not include cost-of-living adjustments.
According to Burrell's report, which she made with Toni Smaw-Bembry, the city's director of human resource management, Portsmouth's pension programs are already underfunded by more than $137 million.
The city has designated $22.8 million out of its $562 million budget for pensions this fiscal year, which began July 1.
Eliminating the Social Security reduction could cost the city an estimated $24.6 million, according to the report.
As of July 1, 2007, Portsmouth's supplemental retirement system included 357 retired participants and beneficiaries and 92 active employees, according to Burrell's report. The system also includes another 60 vested employees, McCoy said.
Burrell said employees signed up for the supplemental system in 1984. Back then, employees were asked to choose between the city's supplemental program or the state system, then known as the Virginia Supplemental Retirement System. Sworn public safety officers are under separate city retirement systems.
McCoy said he doesn't remember why he selected the city's program. "There wouldn't have been any reason for us to stay in the Portsmouth system if it was not going to be an equal system," McCoy said.
He recalls showing employees the benefits of staying in the Portsmouth system versus the state program.
Many supervisors told employees that people with five or more years of experience would be better off staying with the city plan, Larry Scott, a retired 20-year public utilities employee, recalled.
Scott, who was a supervisor at the time, remembers being told Portsmouth's system would mirror the state's program.
About 545 workers opted to transfer to the state system, Burrell said. The city closed its supplemental pension system in December 1984, she said, though council members are still allowed to join.
McCoy said that, in hindsight, the city should have ended its pension program and made employees join the state system. The state program has never reduced benefits because of Social Security, Burrell and Smaw-Bembry's presentation noted.
Jen McCaffery, (757) 446-2627, jen.mccaffery@pilotonline.com
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Trouble in Portsmouth
It appears that Portsmouth (Holley and Company) is playing fast and loose with the pensions of its retired employees in order to balance the city budget. Just another instance of poor character exhibited by politicians and their bureaucratic partners in crime.
Lousy retirees
Can't the senior citizens just face reality? The city needs money for the courthouse to satisfy the lawyers, and the discount convention center to satisy their "elite" and elected officials. Can't they just switch to dog food or something to eat? It would be a shame for the people elected to care for them to have to skimp on a hotel or something.
Sen. Lucas might be able to help
Sen. Lucas might be able to help, oh ! wait she is too busy trying to get her own personal Hotel built so her sorority can have meetings.
Otherwise, maybe she could use her time to help other people.
But like every other Politician she is only looking out for herself.
What a great role model.
Which community has the issue?
I only ask because the mayor of Portsmouth distinctly divided that city into race classes.
fell in
sounds like the former city manager fell into one of his own cost saving scams.......Sorry Luke see what it feels like when noone cares!!!!
find the problem and fix it
I've heard that these people actually took early retirement knowing the reduction was going to happen. I've listened to McCoy speak about this for months at City Council meetings. I don't know who is at fault but figure out what the problem is and FIX IT. If Portsmouth is at fault pony up. If you have to cut the Social Services\Welfare budget from 50 million back to 38 million (where it was 2 years ago) to help pay for it do it.
Problem in P-Town...
Goldfinch typed, "when the retirees lose their homes because they were undercut by the city that they can check-in the hotel that the Mayor wanted."
There's a problem with that. By the time the retirees need permanent hotel accommodations, we'll only have a Black and a White hotel in P-Town. We’ll surely have to build a Hispanic hotel, and maybe an Asian one, too.
This could get expensive. I think we need to hold a bake sale.
New Pension Deal
This is the primary reason it is BETTER to take a lump sum payout if its available and invest it yourself. Under current laws, employers can cut or eliminate pension payments. All we have to do is witness how many pension plans have fallen under the Pension Benefit Guaranty Corporation run by our federal government. Hmmmh, boy, I feel better already knowing they're in charge.
Sounds like something the
Sounds like something the Virginia Beach City Council would do...
?????????????????
How can the city not have the money? Weren't the defined benefit pensions established with an annuity by the city when the employee was hired? And how can the pesion be under funded? Does not federal law require (I believe a law signed by President Clinton) pensions to fully funded and not used for collateral, etc.? If I misunderstand please correct me. Who would knowingly choose the poorer of two retiremet systems? And what concionable organizaton would allow an employee to put his/herself at a disadvanatge like that? Lotsa question here folks.
you've got it wrong waynel77186
Corporations have done this for years. That is why you do not see a pension anymore, but a 401(k). It's not socialism. You, among many others, may want to look up the definition of socialism.
GEE "Council" appointed a committee.
Oh what a web we weave...hold on retirees and current employees, the hidden agenda of this so called fairly appointed committee is going to sting sharply! To save money , of course! Gee who's recommendation did council consider for these committee members? Who is represented on this committee? Portsmouth voters need to vote and end the council connections to bankers, lawyers, restaurant owners, real estate developers and investors and self serving decisions and hidden agendas like this committee. Retirees and current employees should attend these committee meetings, they are open to the public. Exercise your right to vote and also stay informed! Next meeting: Sept. 29th, 3PM, 6th floor conference room.
The Arctic ice floes . . .
At this rate, that is where we will be putting our retirees within a few years, just like the ancients used to do (put them on an ice floe and send them to sea when they are no longer useful to us as workers). Sheesh! Cheers, MGM
Cut Pensions, Build Hotel
It is ironic that Mayor of Portsmouth wanted to build a multi-million dollar hotel while the pension fund of its employees are underfunded. I guess when the retirees lose their homes because they were undercut by the city that they can check-in the hotel that the Mayor wanted.
More of same
Shaft the little people Its their fault they worked their lives and now really stick it to 'em.
Socialists are no better than wall street bloodsuckers.
Typical City Government - Re-elect no one
Typical City Government - Nobody seems to remember the exact details. Produce the signed contracts Porstmouth. Never trust a City Council. Re-elect no one, especially in Porstmouth.
The snub
The rewards of staying with the city. NOT!!!!! I would bet Mayor Holley won't feel the sting of reduced benefits, if he eligible for any city retirement plan.
There you go
again ......the city is poking it to their loyal employees. Why would anybody want to stick around just to get screwed over by the city's panel of gods. They do just what they want to. Look at the the Police Chief, he pretty told them to pack sand last month and that he was leaving. I just wonder how they got him to stay.......I need to quit, they just get me wrapped around the axle!!!!!