Enabling Adoption of Pension Benefit Alternatives That Reduce Costs to Public Sector Employees
Adopted at the in 2014
WHEREAS, many local and state governments are struggling to provide retirement security for employees over the long term while dealing with structural budget problems, tax base and investment losses from the economic downturn, and other fiscal pressures; and
WHEREAS, dealing with these pension costs contributes to cuts in public services, layoffs, and deferral of infrastructure projects; and
WHEREAS, many local governments have depleted fund balances, which impact bond ratings and can result in increased local property taxes; and
WHEREAS, in many cases, the rising costs of providing pension and retirement benefits have resulted in significant contribution increases borne by public sector employees; and
WHEREAS, local and state governments are proposing changes to pension plan offerings that can address budget problems while also reducing the cost of retirement benefits to public sector employees through their voluntary election of alternative plans; and
WHEREAS, U.S. Treasury Department guidelines, rulings, and review processes related to determining the tax treatment of retirement plan contributions impact whether local governments can effectively offer those choices to employees; and
WHEREAS, current federal standards are unclear and could expose employees to new federal taxes on their pension contributions under various new plan options; and
WHEREAS, the U.S. Treasury Department has been asked by several local and state governments to review such pension plan proposals and issue such guidance as provided prior to 2006, NOW THEREFORE, BE IT RESOLVED, that The United States Conference of Mayors calls for federal administrative and regulatory action to clarify these tax issues and enable offerings of alternative pension plans that would ensure a more sustainable pension system, reduced costs to employees, and stronger local and state government financial conditions; and BE IT FURTHER RESOLVED, that The United States Conference of Mayors particularly calls upon the U.S. Department of Treasury to expeditiously promulgate clarifying guidelines or rules that ensure favorable tax treatment of certain retirement plan contributions picked up by governmental employees when employees are given an option to choose a lower-cost plan; and BE IT FURTHER RESOLVED, that The United States Conference of Mayors urges Congress to enact any necessary legislation that would enable such U.S. Treasury policies, and otherwise facilitate local and state government s ability to work cooperatively with employees and unions in addressing long-term structural pension plan issues.