Officials skeptical about lower town pension obligations
A change in fiscal forecasts has brought news regarding the town's pension contributions for the coming 2012-13 fiscal year, but some members of the boards of finance and selectmen remain uneasy with the projections.
A year ago, the town's actuaries projected the town would have to contribute $8.33 million to the two municipal pension funds, but that figure was later adjusted to $6.7 million.
Now, after reviewing the results of another study, as well as investment returns, the amount that needs to be contributed is $4.6 million, the officials were told at a joint meeting Tuesday night.
Some reasons for that, according to Liz Tierney, from the actuary firm Hooker and Holcomb, is that many town employees are retiring later, meaning that while their eventual pension benefit might be higher, payments will not likely have to be paid over as many years.
She also said the earlier projections of the pension obligations had underestimated the number of town employees who left their jobs prior to becoming vested in the pension plan, as well as the numbers retiring on disability. Salaries were also lower than projected.
But what is worrying some elected officials is that the experience study covered the period from 2006 to 2011.
The data from that five-year period, said finance board member Chris DeWitt, could be skewed because of the dismal economy.
"There's no way 2006 to 2011 was a normal period of years economically," agreed finance board Chairman Thomas Flynn.
Finance board member Kenneth Brachfeld said he, too, is concerned about the five years used as the basis for the revised pension projections. "We chose what arguably were the worst five years ever in the economy since the Depression," he said of the new study.
Tierney said the period chosen was typically the way such forecasts are conducted, and said the town could choose to have studies done every three years to keep a closer eye on the status of pension obligations.
"I just find that alarming, personally," Brachfeld said.