Defined benefits gets OK from County Commission

Tue, 12/11/2007 - 5:53pm
By: John Thompson

By next July, Fayette County's employees will have a new, more lucrative retirement plan.

With a 4-1 vote last Wednesday afternoon, the County Commission set in place the conversion from a strict direct contribution benefits plan to a hybrid plan that will feature a defined benefits component.

Defined benefits will provide retiring county workers with more of their pre-retirement income, but employees will have to make a mandatory 2 percent contribution of salary towards the plan.

Commissioner Peter Pfeifer cast the lone dissenting vote and said too many unanswered questions remained about switching to the plan.

While Commissioner Herb Frady still expressed reservations about the plan, he voted to move the program along, but reiterated that he wanted to see the final plan before he gave his OK.

Switching to a defined benefits package has been an issue that has consumed the County Commission for months. During Wednesday’s workshop meeting, the commissioners would routinely spend two hours of number-crunching and debating whether the plan was feasible.

Commissioner Eric Maxwell, who also served on the committee studying the switch, said that his vote implied that there would not be a future liability for taxpayers. The fiscal soundness of the plan has caused concern in many quarters, including former commissioners.

In August, a group of former county commission chairmen banded together to spoke up against adopting a defined benefit pension plan.

The former chairmen said the plan is a bad idea that would cost taxpayers “millions of dollars” and questioned how the plan would be funded.

The letter was signed by former commission chairmen Greg Dunn, Harold Bost, Rick Price, Steve Wallace, George Patton and Jerry Barronton.

At the time, former Chairman Dunn questioned whether the taxpayers’ needs are being taken to heart since the committee that was set up to study the possibility of using a defined pension consisted almost entirely of county employees who could take advantage of it immediately because of their long-standing employment with the county.

The committee includes attorney John Kimball along with Water Director Tony Parrott, Personnel Director Connie Boehnke, Sheriff Randall Johnson and Finance Director Mary Holland.

Dunn said when he was on the commission he got considerable pressure to adopt a defined benefit pension for employees.

Dunn said the county has built up a $40 million fund of cash that’s used to pay for capital projects instead of financing them, such as the nearly completed senior citizens center.

The money is also available for use in case of emergencies, and although the damage was limited, Dunn noted that the county has been hit by two tornadoes in the past several years.

Dunn said said he’d hate to see that money used for a defined pension program, as the federal government would require the county to set aside funds to cover the pension benefits.

The former chairman pointed out that the county currently gives all employees a retirement contribution to a 401(k) plan equivalent to 4 percent of their salary, and by taking advantage of another tax deferment retirement plan by their own election, employees can save up to 16 percent of their annual salary for retirement purposes.

The plan is slated to be implemented by July 1, 2008.

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