For the fourth year in a row, the Board of Finance will send a letter to state government leaders about “out of control” retirement benefits to town employees.
“Our board feels strongly that municipal fringe benefits should align to those in the private sector, especially since municipal employees’ wages are now equal to or better than those in the private sector,” Board of Finance Chairman Ron Fedor wrote in the letter.
The board’s gripe is over the increases in cost of retirement for union employees under the state-controlled Municipal Employees Retirement System, of which Waterford is part. For example, in 2011-12 budget year, Waterford taxpayers paid $3.9 million toward municipal employees' retirements, up $879,459 from the previous budget year.
“Over the past several years, the Town of Waterford has experienced a tremendous budgetary increase in the cost of providing retirement benefits as a member of (MERS),” Fedor wrote in the letter. “The Waterford Board of Finance has been forced to grapple with funding these increases annually, sometimes at the expense of its service level.”
The Full Story
As late as 2004, towns would contribute 3.75 percent of a municipal employee’s salary, and 4.25 percent of salary to fire or police municipal employees, to their retirement to fund MERS, and the employee would contribute 2.25 percent.
In the past eight years, the taxpayer’s percentage has increased drastically, while the employees’ contribution has stayed flat. In 2013, taxpayers will contribute 11.79 percent of a municipal employee’s salary to retirement, and 16.65 percent of salary to a fire or police municipal employee, while the employee still contributes just 2.25 percent.
“We feel the burden of fully-funding MERS is not the sole responsibility of the taxpayer,” Fedor wrote. “We would urge a change in legislation to allow for increasing the employee share to a level commensurate to the benefit derived.”
Additionally, municipal employees’ retirement is based on their last three years of total salary, instead of their base salary. Board of Finance members J.W. “Bill” Sheehan, who served in the Navy, and Mark Wiggins, who served in the Coast Guard, both said the military retirement is based on base pay.
“Twenty years in the Coast Guard, if they counted overtime I’d be a millionaire,” Wiggins said.
The state controls MERS. To change the plan, the state would have to pass new laws, Sheehan said.
How Lucrative Is The Plan?
MERS is based on of the number of years the employee worked and the last three years of salary. The last three years of salary earned by the town employee are averaged together. Then for each year a town employee works, the employee collects 2 percent of that average.
For example, if a town employee made $75,000, $80,000 and $85,000 in his or her last three years, and worked in the town for 30 years, he or she would collect 60 percent of $80,000, or $48,000 a year for the rest of his or her life. That number increases over time for cost of living.
The percentage is capped at how much you can collect. In most contracts, you can’t collect more than 75 percent of your salary, which would be achieved after working 38 years.
Editor's Note: MERS applies to all town employees, not just union employees. There are non-union employees who work in town, such as dispatchers, most department heads and the First Selectman.