Houston City Council on Wednesday paved the way for city attorneys to sue an actuarial firm the city claims gave inaccurate pension estimates that spurred costly changes to firefighters’ retirement benefits in 2001.
Houston’s contribution rate to the fire pension skyrocketed soon after the changes were approved, despite an actuarial report from Towers Perrin, now Towers Watson, that predicted the payment rate would remain flat for a decade. This year, the city is contributing 33 percent of payroll to firefighters’ retirements, more than double the rate prior to the changes.
In the event of a payout in the proposed lawsuit, the money would be used to reimburse the city for the Susman Godfrey’s fees and expenses up to $970,000, and the firm would get a third of the remaining cash, with the city keeping the rest.
See here and here for the background. Based on past history, the city would have a decent chance of winning. How much they might stand to collect remains to be seen, but it likely would fall in the “not nothing, but not going to make a big dent in the unfunded liability” bucket.