New Policy Study Looks At Police, Fire Pensions

By: WOWT 6 News Email
By: WOWT 6 News Email

A newly released study details issues with the current Omaha Police and Fire Department's defined benefit pension plan.

The study came from the Platte Institute for Economic Research.

The research says under the current system, retirement benefits are not based on investment performance of contributions.

"This means as a plan assumes more investment risk, or anticipates a greater investment return than is likely, public budgets and taxpayers also face greater risk," reads a release from the institute.

Researchers found the current system does anticipate a greater return than is likely - assuming an 8 percent annual return on investment. They call that high - pointing to the fact Berkshire Hathaway pensions assume a return of 6 percent.

Researchers suggest a defined contribution plan instead. The Platte Institute says defined contribution pensions cannot generate unfunded liabilities.

The Institute says it wouldn't have to be a 401(k)-style plan.
They say one option would be adopting a system like the federal government’s pension system.

It uses diverse index funds, bonds, and trade limits to guard against risk based on an employee’s years until retirement.

The study is titled, "Protecting Omaha’s Future: Confronting the Challenge of Public Pension Reform."

Dr. Andrew G. Biggs is the author of the study. He's a former Deputy Commissioner of the Social Security Administration.


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