City of Fargo looks at different retirement plan optionsFargo, ND (WDAY TV) - With a tough national economy, Fargo is continuing to pour more and more money into its pension plan. Now one commissioner is asking the city to take a new look at an old idea to save taxpayers money.
With a tough national economy, Fargo is continuing to pour more and more money into its pension plan. Now one commissioner is asking the city to take a new look at an old idea to save taxpayers money. At tonight’s City Commission meeting Dave Piepkorn is asking the city to explore the idea of switching retirement plans from a pension plan to a 401K. Pensions are guaranteed, putting the burden of a financial disaster onto the taxpayer, but with a 401K, all the risk falls directly onto the employee.
Commissioner Piepkorn has owned his own small business for years. Like most small businesses, he has always offered his employees a 401K plan.
Dave Piepkorn – Fargo City Commissioner: “People converted from pensions over 20 years ago, so it's just taking a while for people in the government to do the same thing. I'm not trying to throw it all out immediately, but I just think it's a gradual process that we need to begin.”
Over the last five years the city has seen zero growth in its pension assets. In fact, since 2006 the number has actually dropped from $67.6 million to $64.4 million. But still for some a complete change to a 401K is not the answer
Kent Costin – Fargo’s Director of Finance: “If you step back and look on a national scene, at the state level, teachers, public employees across the nation still have sizeable investments in these plans.”
Under the current pension plan, contributions are 6% by the city and 4.5% percent by the employee. The city hopes to increase each of those by 1% in 2012 and again in 2013.
Kent Costin: “It works well and its an efficient benefit delivery system and its attractive for our employees to be covered by these types of systems.”
For Piepkorn, the time to start looking at a change is now.
Dave Piepkorn: “If it dropped tremendously then we would have millions of dollars that would be the responsibility of the City of Fargo, and to me that's very risky.”
The Public can also comment on the budget at the next commission meeting on September 19th.