Though the policy likely won’t be adopted until early summer, the city of Milledgeville’s pension committee recommended sending a new retirement plan to City Council Wednesday.
City financial planner Brenda Josey said Council approved of the changes at last month’s retreat.
Currently, the city operates under a defined benefit plan, which is designed to pay retirees a certain amount of money in a benefit based on years of service and five years of highest pay formula. Individuals must work one full year for eligibility.
One hundred percent of the funding comes from the city at 19 percent of base pay for every employee.
“As you are well aware that’s an expensive undertaking for the city,” Josey said.
The suggested alteration switches to a defined contribution plan where the employees put something in that the city matches.
Employees pay a 2 percent of base pay kickback, which the city would match. Josey said up to a 4 percent city match of the defined contribution is covered though the individual could give more.
As proposed by committee Wednesday, this long-range retirement plan change starts July 1. City Manager Barry Jarrett said as far as the employees are concerned the city would like the policy to be effective then.
After that point, any new city hires start under the defined contribution plan. Those in the old plan stay there.
“We aren’t proposing taking anything away from anybody that’s currently employed with the city,” Josey said. “Nothing changes for those in the defined benefit plan.”
The vesting for the defined contribution plan is 10 years also.
New hires will know about the mandatory contribution plan before they start work.
“That’s the kind of thing you need to go over with someone the minute they are hired, so they know everything they are eligible for. They need to sign that they are aware of that,” pension committee member Councilwoman Jeanette Walden, District 2, said.