Firefighter retirements unlikely to require higher payments to pension plan
It's unlikely that recent retirements from the Fire Department will mean the town's annual required contribution to the police and fire pension fund has to be increased, the Board of Finance learned Wednesday at its quarterly budget review.
In the future, said Brian Vahey, a member of the joint pension board, the retirements could have a significant impact, however. He said a recent "experience study" reviewing the previous five years shows more town employees staying on the job past usual retirement age. But that, Vahey said, now seems to be changing.
An anonymous letter last December to Board of Finance Chairman Thomas Flynn sparked controversy when officials learned that firefighters were being promoted or transferred shortly before their retirement. Those appointments boosted their salaries, thereby increasing their pension benefits even though they served in the new jobs only briefly. In two recent cases, transfers of assistant chiefs to the Fire Department's training center about two weeks before they retired meant an additional $8,000 in annual pension benefits for each man.
Vahey also said that the town's annual required contribution, or ARC, to the pension fund could be lower than expected because of the market performance of the pension funds.
"For this year, if you're not going to change the experience study numbers, you're not going to see any change in your ARC," Vahey said. "And if the markets continue this way, you're probably going to see less."
But Flynn said he believes the board needs to get a revised calculation for the ARC because of the firefighter pensions. "Otherwise, we're making decisions based on bad information," he said.
Another finance board member, Kenneth Brachfeld, said he agreed that firefighter pensions will not have an impact on this year's ARC.
"I want to hear that from the actuaries," Flynn said. "They may have a profound impact, they may not, but I want to hear that from the actuaries."
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