Cobb’s pension plan under-funded

Citing a $115 million gap in its employee pension fund, Cobb County told workers late Thursday that it wants to alter its pension formula to increase employee contributions and reduce some benefits, among other changes.

With about $349 million in assets and about $578 million in obligations, the plan is under-funded by about 40 percent, one of the worst ratios in the metro area. To meet acceptable standards, it must cut that rate to 20 percent, bringing assets up to about $464 million.

The county plan covers more than 4,000 workers and about 1,300 retirees. Its funding rate of 60 percent is one of the worst in the metro area, rivaling the Atlanta General Employees fund and the Clayton County pension fund.

A nearly 4 percent loss on investments in the first seven months of the year and poor performance for three years at the start of the decade, more retirees leaving at an earlier age than anticipated, higher salaries that lead to bigger retirement packages and a longer lifespan for retirees are among factors forcing the changes, said Virgil Moon, the county’s director of support services and pension board chairman.

The industry standard for public employee pensions is a funding rate of 80 percent. Moon said the changes will put Cobb on a track to reach that in 20 years. Accounting standards for governments allow 30 years, he said.

One major change for all employees is a recommendation to stop crediting overtime pay toward retirement. It drew an immediate bark from the Fraternal Order of Police.

“These employees who are one or two years out of retirement, it’s going to affect them,” said Jorge Mestre, state FOP trustees chairman.

As proposed, some of the changes would begin next year while others would be phased in through 2012.

The measure goes before the County Commission for a vote on Tuesday.