A city pension committee is recommending the Minot City Council replace employee pension benefits for future employees with a defined contribution plan.
The Pension Ad Hoc Committee voted this week to have the city close the pension plan to new employees at a date to be determined by the council. The city would solicit proposals for a defined contribution plan for new hires.
An actuary told the committee last fall that the fund is vulnerable. With $51 million in the fund, the plan is only 49 percent funded in terms of meeting its liabilities over 30 years. The standard recommendation has been to have pension funds at least 80 percent funded.
Cindy Hemphill, finance director, said the city still would have to fund the unfunded liability if the plan is closed. The cost to the city of a defined contribution plan is uncertain without knowing what proposals the city might be able to solicit, she said.
The city expects to pay in nearly $2.77 million for employee pensions and $126,848 for Social Security for 2013.
The North Dakota Senate approved a pension bill 35-12 this week that continues the public employees pension fund but also calls for a study into the creation of an alternative retirement plan. The state's pension plan is reported to be 64.7 percent funded. Continuing the plan in the next biennium is estimated to cost the state about $11.58 million.