By Matt Artz
Monday, April 27th, 2009 at 6:24 pm in Uncategorized.
Last year Fremont spent more than $18 million on employee pension contributions. That is a lot more than it spent back in the 1990s when the stock market was good.
At that time stock market returns were so flush that cities, including Fremont, decided to offer employees more generous pension benefits.
Since then, however, the market has tanked twice. Now cities have to contribute a lot more to the state retirement system to cover their employee pension obligations.
Fremont’s pension contribution rates are currently 29 percent for police and fire and 18 percent for everybody else.
That means that if a police officer makes a base salary of $100,000, the city pays an extra $29,000 a year toward his or her pension. The police officer would pay $9,000, which is 9 percent of salary.
For a non-sworn employee making $100,000, the city pays $18,000 a year and the employee pays $8,000.
The city pays more for police and fire because they have more lucrative pension benefits.
Back in the late 1990s, the pension rates were in the single digits. In a couple of years they are expected to climb above 30 percent for police and fire. The state pension system anticipates annual returns of nearly 8 percent. Last year it lost about 27 percent.