Pension Costs

The City pension charge is a required expenditure for any government that has a defined benefit pension plan for its employees. The defined benefit pension plan at the City of Ann Arbor has both the employee and employer pay a portion of the costs. The amount of the employer’s share is determined annually by an actuarial valuation. The employee’s share is set by City ordinance. 

For budget purposes, the City uses a percentage from the actuary report and applies it to wages to determine each service unit’s share of the total Actuarially Recommended Cost (ARC). The entire ARC is what the City is required to fund each year and remit to the Pension Trust fund.    

The City's Retirement System was fully funded through 2008.  Recent decreases reflect the effect of the market downturn.

This chart represents the last two audited fiscal years for pensions and other post-employment retirement benefits.   The City's Pension is 83% funded while OPEB is 35% funded. Combined, the City's liability for these two items are 70% funded as of 2011 and 67% funded as of 2012.