City of Fort Worth, Texas Continues to Struggle with Underfunded Pensions

Fort Worth hammered out a new contract for its police officers the city government continues to suffer under the ongoing problem of its underfunded pension plan for city employees. Fort Worth is not the only city with an underfunded pension on its books. This problem is widespread and even the Texas state pension plan for state employees is underfunded. The underfunded pension issue is not just a government employee problem. Studies of private defined benefit pension plans indicate private pensions typically only retain 81% funding and only 10% fully funded. The Fort Worth Retirement Fund maintains only 71% funding, 10% below the average private retirement plan. Fort Worth has taken many steps to deal with underfunding, including restructuring workforce, reducing benefits and assuming greater risk.

Fort Worth employment discrimination against older employees for pension benefits

The city of Fort Worth employees, including its police and fire employees, are likely to see increased employee contribution requirements as well as future changes to the benefit formula resulting in reduced retirement benefits. Some senior employees alleged Fort Worth’s city government made employment decisions that discriminate against older employees. The greater the pay the greater the retirement benefits. The city has an incentive to avoid increasing the pension funding liability by giving older workers more pay.

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