After over a year of study and monitoring of city finances, the Newport City Council is changing its benefits package for most new city employees. Those who were working under the city’s “defined benefit” or “you know how much retirement income you’ll be receiving” plan will see that approach continue. But new hires will not. They will be brought in on a “defined contribution” plan with retirement benefits being determined by what retirement investment returns have yielded over the years.
The reason for the switch was due to the same forces at work in states, counties and cities across the country. The costs associated with a defined benefit plans were weighing down local budgets. Some cities are even going bankrupt over it. Newport Finance Director David Marshall said by switching to the new system, it will save the city literally millions of dollars down the road. The change covers only the city’s own retirement system. Many in the police and fire departments are covered by the state Public Employees Retirement System (PERS) and are not affected by the move.