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Where is the Leadership?

Ditch the pension plan and institute a 401K program, RTC chairman advises.

 

To the Editor:

Democrats have led Hamden in the last 23 of 25 years. I believe for the entire 25 year period the pension plan has been an issue with each and every administration. To-date, even in the face of a complete pension meltdown, the Democrats are still studying the issue. Does this sound like leadership to anyone?

Let me give you several examples of what I mean by listing short excerpts from what was reported in the New Haven Register:

1. In a little over three years, the corpus disappears (meaning the pension is depleted)

2. The town needs to keep up funding levels or its bond rating could worsen

3. Future budgets would need to cover the cost of the pension obligation bonds debt service for the full actuarial amount.

4. The Hamden Retirement Board July 2010 report said four years were left in the fund. It recommended a contribution that year of $19 million.

5. The town never fully funded its obligation.

Summarizing the above we see that the town has known about the problem for years. The fund is about to be depleted and the same party that created the problem is struggling to find a solution that has eluded them for nearly 25 years.

The situation is urgent requiring immediate action. So what does this team come up with for a solution - spending more money to study the problem further. Again, does this sound like leadership to anyone?

Here is what I propose. First, anyone who is receiving a pension – no change to the plan. Second, anyone with more than 10 years of service – no change. Finally, anyone with ten years or less of service, keep what you built up, but that is the end of the line for the old pension plan.

Going forward, the existing pension plan is terminated. As a result, the future unfunded liability is substantially diminished. We move to a plan similar to a 401K with matching contributions. The pension plan becomes completely portable and is managed by professionals or by the employee– their choice.

With the above changes you bond what’s left, while simultaneously greatly reducing the town’s future liability. In the end, what remains is a plan the town can afford and taxpayers can pay.

The difference between leadership and the nonsense demonstrated to-date is that discussion must lead to decisive action. So far, we haven’t seen any.

Ron Gambardella
Republican Town Committee chairman 

AG May 17, 2012 at 01:54 AM
Sorry,here is the link: http://www.ct.gov/opm/lib/opm/igp/munfinsr/fi2006-2010_12-9-11_v2.pdf
Charles Baltayan May 17, 2012 at 03:21 AM
The employees have contributed to the plan, as has the town. The plan members have the same benefits as those 'in the real world' and like us, are subject to the same economic vagaries. Thankfully they have not been subject to the likes of Enron or been lied to about the amount of money in their brokerage accounts. When they were employed by the town they received the information on the plan and willfully accepted it. The plan states the town has no liability to the plan. The members have clear rights to the funds in the plan and can opt out anytime. The members all knew that the town was not funding the plan. We need to do what is right for the plan member/employee and dissolve the plan ASAP, yielding the member the most money to invest as they see fit to retire and then they can supplement with social security as able or desired. The plan member gets what is due, the taxpayer is not left with an unreasonable burden and hopefully the administration learns to act in a fiscally responsible manner in thefuture.
AG May 17, 2012 at 03:56 AM
Charles, my read is a bit different. The $300M AAL is a clear legal obligation and we cannot wish it away. I'm afraid eventually the taxpayer will be left holding the bag in one form or another. You say "The members have clear rights to the funds in the plan and can opt out anytime." Title 1 (General Provisions) Sec.31.32 (Participation) says in part -*All eligible employees shall participate in the plan as a condition of employment with the town, and shall make any mandatory employee contributions so required for non-bargaining unit employees or by the applicable collective bargaining agreement.* I see no provision for opting out, What are you referring to?
George Levinson May 17, 2012 at 06:19 AM
Thomas, Most private sector companies have a formula very similar to Hamden's. The issue is not how long or when you have earned it. The issue is how old do you have to be to start collecting. In Hamden you can collect immediately upon earning it. That means many police or fire can collect in their early forties and there is no reduction. In addition, public sector workers get guaranteed COLA. In the private sector the reduction for early collection is typically around 6% for every year early. At this point almost nobody in the private sector gets a defined benefit pension at all. And, by the way, almost nobody has ever gotten COLA at all. How much more do you need to realize that the town workers have been given an extraordinary sweet deal? There are no acceptable solutions other than big concessions or dissolving the plan altogether.
Ron Gambardella May 17, 2012 at 12:58 PM
Actuarial assessments determine what funding levels are required to support whatever plan the administration enacts. They do not write policy or decide what plan is best for the town. They do, however, provide helpful insights relative to the overall funding levels. The current actuarial projections always assume the existing plan stays as is. Once the plan is changed, the unfunded liability will also change. For example, folks who have ten years of service or less will be removed from the unfunded liability equation or at least the portion of the funding that they have not earned under the old rules. With the increase in retirement age and the termination of the existing plan, the unfunded liability should decrease substantially saving millions of dollars. The actuaries can then revise their projection based on the new rules. With 23 years of Democrats at the helm, this, so far, has not been addressed. That may change, but it took a crises to get us there. That is not leadership!

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