Coral Gables balks at hiking pension payments
A Coral Gables advisory board wants to give retired employees a near 6 percent cost-of-living increase to their pension benefits, but city commissioners put the brakes on that plan Tuesday (Dec. 11).
Under city rules, whenever the city’s pension fund earns more than 10 percent on its investments in a year, the pension board can recommend that some of the gain be dispensed to retirees as a “cost-of-living adjustment,” or COLA. Despite the name, however, this adjustment is not tied to the inflation rate, which is now about 2.2 percent. In effect, it’s a windfall for retirees if the pension fund has a good year.
But the rule does not take into account the overall health of the pension fund. While Coral Gables has enough money in the fund to pay current retirees, it is more than $200 million short of what it needs in the long term to provide promised benefits when current employees retire in the future.