Retirement benefits proved to be the sticking point Monday night when the Representative Town Meeting rejected three-year contracts with the unions representing both firefighters and Town Hall employees.

"I'd like to see us moved to a defined contribution plan," said Ed Bateson, R-3, adding that an analysis should be done on switching from a pension program to a 401K-type plan for the union members' retirement benefits.

In the Town Hall workers' pact, the language calls for the town, at its discretion, to offer any employee a 401K plan, with the town contributing once the employee has worked for five years. In the firefighters' contract, the language states the town may offer a 401K plan to new hires. In both cases, any worker choosing to enroll in a 401K plan cannot later switch to the pension plan, and vice versa.

"The intent is there, but there's nothing to it," Bateson said. "It was addressed but not enough."

Robert Smith, the fire union president, said he was disappointed in the RTM vote. "We came up with a mutual agreement," he said. "I'm not happy; a lot of time and energy was invested." He said he would consult with the union's lawyer before deciding what steps to take next.

The RTM rejected the Town Hall employees' contract by a 25-10 vote, with one abstention. The firefighters' contract went down in a 22-12 vote, with two abstentions.

Majority Leader James Millington, R-9, said Tuesday the RTM doesn't want to take away pensions from current municipal employees. "They will get what they have been promised," he said. What a majority of the legislative body wants to change, he said, is retirement benefits for future employees.

"We've made it clear at the beginning of the process," he said. "We're looking at the future ... I think that's what the statement was."

While Millington said the vote was "historic" and sent a message, First Selectman Kenneth Flatto on Tuesday called it "shocking" and said it "smacks of politics."

Board of Finance Chairman Thomas Flynn said his board has asked for a study on the pension fund question by its actuaries. "I don't see a complete financial analysis of what this will cost in the long term," he said, just the cost over the life of the contract. "Our board made it very clear the short-term costs of these contracts is not what concerns us."

These were the first two of seven employee contracts the town is renegotiating.

"These contracts are affording the town the lowest cost impact in 50 years," Flatto said.

Donald Houston, the lawyer who negotiated on behalf of the town, said officials had proposed "much stronger language" about defined contribution plans but were unable to get it accepted. "It was the best agreement we could get," he said.

Houston said defined benefit plans, such as pensions, remain the standard in the state for municipal employees. "However, you are starting to see, especially for new employees, a switch to defined contributions, but that's nowhere near a majority."

"Why can't we be on the cutting edge," Millington said. "We really have to make some fundamental changes for the future." He said the decision not to change the retirement benefits for future employees falls in the first selectman's lap. "These are basically Ken Flatto's contracts. Ken and his staff decided with the unions what was important and what was not important."

"I do understand there is a side issue about the retirement and pension benefits," Flatto said. "These items have to be negotiated. You can't just unilaterally change a plan without consent." And making those types of changes, he said, "is a very hard, difficult process."

RTM member Carolyn Richmond, R-1, said that with the current state of the economy, it was hard for her to commit the town to a three-year contract. "I think in these uncertain times, we need to be a little more careful," she said.

The amount the employees would pay the town for their health premiums in retirement also concerned Peter Ambrose, R-2. "I thought our administration had been put on notice early on with our concerns with regard to negotiating contracts," Ambrose said. "I'm not satisfied with the results."

The rejected firefighters' contract called for no salary increase in the first year, a 2 percent raise the second year and a 2.75 percent increase in the third and final year. It cut the number of sick days from 30 to 12; reduced the maximum amount of pension payments from 80 percent to 75 percent; doubled co-pays for health insurance, and increased the employee contribution toward health premiums from $31 to $36 a week.

For Town Hall workers, the contract had no pay increase for the first six months. It called for one unpaid furlough day and one paid furlough day. In January 2011, salaries would have risen 1.5 percent and then increase 2.5 percent in August 2011. As of July 2012, the salary increase would be 3.25 percent. Health coverage for retirees or their dependents would be reduced to a Medicare "carve-out," rather than a more expensive supplemental plan, for those covered upon reaching the age of 65, and the cost of Medicare would be borne by the employee or retiree. Health insurance co-pays would also double, and current employees would pay 10 percent of their premiums beginning July 2011 and 11 percent the following year. Employees hired after July 1, 2011, would pay 12 percent and 13 percent the next year.