Concerns over pensions is a sign of the economic times, including in Fayette County. The Fayetteville City Council is considering a Voluntary Early Retirement Incentive Program (ERIP) to help offset budget concerns due to the worsening economy.

Council members Nov. 21 heard the first reading of the proposal that would be available to all employees aged 55 and older with 10 years of continuous service.

If approved by the council and if eligible employees elect to do so, those participating would receive their full retirement benefit based on the normal retirement age of 62. Those choosing to participate would also receive a one-time incentive bonus of $1,000 per year for each year of credited service. Participating employees would continue on the city’s health, dental, vision and life insurance programs.

The initial impact of the program, based on all 13 eligible employees participating, would be $77,505 for the first full year, according to City Manager Joe Morton.

This saving does not include savings in salary and benefits from positions that would not be filled immediately or from filling positions at a lower salary level, Morton said.

The savings of more than $77,500 would be realized because new employees are not eligible to participate for the first year of service so the city would not have to pay into the program for them, Morton said.

As considered, the retirement window would be open from Dec. 5 through Jan. 23, 2009. Employees electing to participate could withdraw no later than Jan. 30. The retirement date would be effective Jan. 31.

An actuarial cost analysis for the program was performed by Georgia Municipal Employee Benefit System.

Morton said the city’s defined benefits pension program is 100 percent funded, noting that it is intended to be one that provides perhaps up to 50 of salary after 30 years.

“Our plan is good but it’s not rich. It was not designed to be a total income replacement,” Morton said. “So employees will need other income sources.”

The current proposal to save money is not the first for Fayetteville. A hiring freeze has been in effect for more than a year, Morton said, adding that training and travel have been cut.

Other cost-cutting measures included 5 percent overall budget reductions in the general fund for the past two years, said Morton.

The council is expected to vote on the issue at its Dec. 4 meeting.

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