The pension fund of the City of Memphis is funded three ways:
employee contributions, employer contributions, and market returns
From July 1, 2012 through June 30, 2013 (the latest report given to us by the City), the employees put more into the pension fund than the City of Memphis at an amount of $21 million. The city contributed $19 million. The investment returns for the same time period were $185 million. For the past several years, the City has put the statutory minimum into the pension fund, which is always less than what the employees put into the fund.
City of Memphis retirements are based from the employee's years of service and salary at time of retirement. Public safety employeess' retirement are based from a three year average of salary. Non-public safety employees are based from their last 12 months of salary. The highest that any employee can retire with is 72.5% of that average, which is about 35 years of service. Any service over 35 years is not counted for retirement purposes.
Absent of any employment prior to coming to the City of Memphis, which is subject to the Pension Windfall Elimination Act, a retiree with the City does not recive Social Security. Their retirement from the City of Memphis is the only retirement income they will receive based on thier city employment.
Employees earn 2.25% up to 2.5% for each year of service (depending on hire date) for up to 25 year of service and then 1% for every year of service thereafter, with a maximum of 72.5% based on your best three-year average of base wages. Any overtime pay is NOT calculated for pension benefits.
Over the past few decades, the city's (funded by the taxpayer) percentage of contributions into the pension fund has gone down, while the employees' percentage of contributions has gone up.
The city's (taxpayer) contribution to the Memphis Pension Fund constitutes 3.1% of the ENTIRE city budget